EX-99.3 4 a2201943zex-99_3.htm EXHIBIT 99.3

Exhibit 99.3

AUDITORS' REPORT ON
THE RECONCILIATION TO
UNITED STATES GAAP

To the Board of Directors of Kinross Gold Corporation

On February 16, 2011, we reported on the consolidated balance sheets of Kinross Gold Corporation ("the Company") as at December 31, 2010 and December 31, 2009 and the consolidated statements of operations, cash flows, common shareholders' equity and comprehensive income (loss) for each of the years in the three-year period ended December 31, 2010. Our audits were for the purpose of forming an opinion on the basic consolidated financial statements taken as a whole. The supplementary information included in the related supplemental note entitled "Reconciliation to Generally Accepted Accounting Principles in the United States" is presented for purposes of additional analysis. Such supplmentary information has been subjected to the auditing procedures applied in the audits of the basic consolidated financial statements and, in our opinion, is fairly stated in all material respects in relation to the basic consolidated financial statements taken as a whole.

GRAPHIC


Chartered Accountants, Licensed Public Accountants
Toronto, Canada
February 16, 2011

1

RECONCILIATION TO GENERALLY ACCEPTED ACCOUNTING PRINCIPLES IN THE UNITED STATES

Years ended December 31, 2010, 2009 and 2008

The 2010 consolidated financial statements of Kinross Gold Corporation ("Kinross", or the "Company") have been prepared in accordance with Canadian generally accepted accounting principles ("CDN GAAP"), which in some respects differ from United States generally accepted accounting principles ("US GAAP"). The effects of these differences on the Company's consolidated financial statements for the year ended December 31, 2010 are provided in the following CDN GAAP to US GAAP reconciliation which should be read in conjunction with Kinross' consolidated financial statements prepared in accordance with CDN GAAP.

Reconciliation of Net Earnings (Loss) and Comprehensive Income (Loss)

          For the Years Ended December 31,    
(expressed in millions of United States dollars, except share and per share amounts)         2010     2009     2008    
Net Earnings (Loss) under CDN GAAP       $ 771.6   $ 309.9   $ (807.2 )  

US GAAP Adjustments:
 
 
 
 
 
 
 
 
 
 
 
 
 
  Non-controlling interest   Note 1(e )   109.3     102.3     42.3    
  Inventory adjustment   Note 1(f )   2.2     0.2     1.5    
  Amortization of derivative gains in property, plant and equipment   Note 1(d )   2.3     0.4     -    
  Fair value of warrants   Note 1(c )   35.2     24.7     14.6    
  Capitalized stripping costs   Note 1(b )   (27.4 )   (29.8 )   (11.5 )  
  Capitalized development costs   Note 1(h )   (29.5 )   -     -    
  Red Back purchase adjustments   Note 7     164.8     -     -    
  Valuation allowance reversal from acquisitions   Note 1(i )   39.4     -     -    
  Tax impact of US GAAP adjustments         5.5     7.2     2.5    
Net Earnings (Loss) under US GAAP       $ 1,073.4   $ 414.9   $ (757.8 )  

Attributable to non-controlling interest
 
 
 
 
(109.3
)
 
(102.3
)
 
(42.3
)
 
Attributable to common shareholders       $ 964.1   $ 312.6   $ (800.1 )  

Other Comprehensive Income (Loss) under CDN GAAP
 
 
 
 
57.4
 
 
(57.3
)
 
(66.3
)
 

US GAAP Adjustments:
 
 
 
 
 
 
 
 
 
 
 
 
 
  Change in funded status of the pension liability   Note 1(g )   (0.2 )   0.7     (3.4 )  
  Fair value of derivatives   Note 1(d )   -     -     1.6    
  Non-controlling interest   Note 1(e )   -     -     -    
  Reversal of tax on investments   Note 1(i )   2.5     -     -    
  Derivative instruments   Note 1(d )   (3.0 )   (2.2 )   17.2    
Other Comprehensive Income (Loss) under US GAAP         56.7     (58.8 )   (50.9 )  

Total Comprehensive Income (Loss) under US GAAP
 
 
 
 
1,130.1
 
 
356.1
 
 
(808.7
)
 

Attributable to non-controlling interest
 
 
 
 
(109.3
)
 
(102.3
)
 
(42.3
)
 
Attributable to common shareholders       $ 1,020.8   $ 253.8   $ (851.0 )  
  Basic Earnings (Loss) per Share (1)       $ 1.17   $ 0.45   $ (1.27 )  
  Diluted Earnings (Loss) per Share(1)       $ 1.16   $ 0.45   $ (1.27 )  
(1)
The weighted average number of common shares outstanding is the same under US and Canadian GAAP.

2

US GAAP Condensed Balance Sheets

      As at December 31, 2010     As at December 31, 2009  
(expressed in millions of United States dollars, except share and per share amounts)     CDN GAAP     US GAAP
Adjustments		     US GAAP     CDN GAAP     US GAAP
Adjustments		     US GAAP  
Current assets Notes 1(b),(f)   $ 2,668.5   $ (12.0 ) $ 2,656.5   $ 1,390.9   $ (14.2 ) $ 1,376.7  
Property, plant and equipment Notes 1(b),(d),(h),(i), Note 7     6,911.5     (29.3 )   6,882.2     4,989.9     (73.9 )   4,916.0  
Other non-current assets Notes 1(a),(b),(d),(f),(g), Note 7     6,817.1     1,406.3     8,223.4     1,632.4     39.4     1,671.8  
    $ 16,397.1   $ 1,365.0   $ 17,762.1   $ 8,013.2   $ (48.7 ) $ 7,964.5  
Current liabilities Note 1(c),(g)   $ 927.4   $ 48.7   $ 976.1   $ 638.0   $ 83.9   $ 721.9  
Non-current liabilities Notes 1(a),(d),(f),(g),(h), Note 7     1,870.8     35.8     1,906.6     1,682.8     26.4     1,709.2  
Non-controlling interest Note 1(e), Note 7     198.4     (198.4 )   -     132.9     (132.9 )   -  

Equity
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
  Non-controlling interest Note 1(e), Note 7     -     252.1     252.1     -     132.9     132.9  
  Common shareholders' equity Notes 1(b) - 1(p), Note 7     13,400.5     1,226.8     14,627.3     5,559.5     (159.0 )   5,400.5  
    $ 16,397.1   $ 1,365.0   $ 17,762.1   $ 8,013.2   $ (48.7 ) $ 7,964.5  

Reconciliation of Shareholders' Equity

      As at December 31,    
(expressed in millions of United States dollars, except share and per share amounts)     2010     2009    
Common Shareholders' Equity under CDN GAAP   $ 13,400.5   $ 5,559.5    
US GAAP Adjustments:                
  Inventory adjustment Note 1(f)   (8.2 )   (9.6 )  
  Fair value of warrants Note 1(c)   (48.4 )   (83.6 )  
  Capitalized stripping costs Note 1(b)   (114.8 )   (91.1 )  
  Non-controlling interest Note 1(e), Note 7   198.4     132.9    
  Restatement to equity account for Echo Bay & Goodwill Impairment Note 1(m)   0.6     0.6    
  Capitalized development costs Note 1(h)   (24.5 )   -    
  Derivative instruments Note 1(d)   27.4     28.9    
  Red Back purchase adjustments Note 7   1,413.4     -    
  Valuation allowance reversal from acquisitions Note 1(i)   39.4     -    
  Other     (4.4 )   (4.2 )  
Equity under US GAAP   $ 14,879.4   $ 5,533.4    

KINROSS GOLD CORPORATION RECONCILIATION TO US GAAP                                                                         3

Certain comparative information has been reclassified to conform to the current year's presentation.

Statements of Cash Flows

The consolidated statements of cash flows prepared in accordance with CDN GAAP present substantially the same information that is required under US GAAP. However, as the accounting treatment for post production stripping costs is different between the two standards, it results in a difference in classification on the cash flow statements. Under CDN GAAP, post production stripping costs of $61.0 million in 2010 (2009 - $53.0 million, 2008 - $38.9 million) were capitalized and treated as an investing activity, but under US GAAP capitalized stripping costs are expensed and shown as an operating activity in the statement of cash flows.

4

NOTES TO THE US GAAP RECONCILIATION

Years ended December 31, 2010, 2009 and 2008

NOTE 1 - ADJUSTMENTS TO CDN GAAP

Current period adjustments

(a)
On January 1, 2009, the Company adopted ASC Subtopic 470-20 (formerly FASB Staff Position No. APB 14-1, Accounting for Convertible Debt Instruments That May be Settled in Cash upon Conversion (Including Partial Cash Settlement)), which requires issuers of convertible debt that may be settled wholly or partly in cash when converted to account for the debt and equity components separately. Once adopted, ASC Subtopic 470-20 requires retrospective application to the terms of instruments as they existed for all periods presented. The adoption of ASC Subtopic 470-20 affects the accounting for the convertible debentures issued in the aggregate principal amount of $460.0 million on January 29, 2008.

    The adoption of ASC Subtopic 470-20 harmonizes the previously existing CDN GAAP and US GAAP difference with the exception of transaction costs, discussed below.

    Under CDN GAAP, Kinross' accounting policy is to record transaction costs against the carrying value of the debt. However, under US GAAP, transaction costs are recorded as a deferred charge on the balance sheet. As at December 31, 2010, the net deferred charge recorded was $5.0 million (December 31, 2009 - $7.3 million). The amortization of the transaction costs is reflected in earnings under CDN and US GAAP.

    Earnings under CDN GAAP for 2008 reflect the requirements of ASC Subtopic 470-20. As a result, no adjustments to CDN GAAP earnings were required for the year ended December 31, 2008.

    As at December 31, 2010, the amount recorded in equity related to the convertible debentures was $76.6 million (December 31, 2009 - $76.6 million). The discount on the liability will be amortized over approximately two years to March 2013. The unamortized discount as at December 31, 2010 was $36.6 million (December 31, 2009 - $51.7 million). For 2010, interest of $25.6 million (2009 - $24.7 million) was recorded, of which $17.6 million (2009 - $16.6 million) relates to the amortization of the discount on the liability. The effective interest rate on the liability is 5.7%.

(b)
On January 1, 2006, the Company adopted ASC Subtopic 930-330 (formerly Emerging Issues Task Force Issue No. 04-6, Accounting for Stripping Costs Incurred During Production in the Mining Industry), which differs from the Canadian Emerging Issues Committee ("EIC") No. 160, "Stripping Costs Incurred in the Production Phase of a Mining Operation" ("EIC-160"). Under ASC Subtopic 930-330, production stripping costs are deemed to be variable production costs and are therefore included in the cost of inventory produced during the period in which the costs are incurred. Under EIC-160, stripping costs should be capitalized if the stripping activity can be shown to represent a betterment to the mineral property. For 2010, the net effect of expensing the stripping costs for US GAAP would result in a net decrease in earnings of $23.7 million, net of taxes of $3.7 million (2009 - $22.5 million, net of taxes of $7.3 million; 2008 - $8.7 million, net of taxes of $2.8 million).

    During 2009, the Company recorded an out-of-period adjustment of $8.0 million to recognize the tax impact of the US GAAP adjustment expensing stripping costs for the years up to and including 2007. Prior to 2008, the tax impact of the US GAAP adjustment expensing stripping costs was not recorded. This adjustment resulted in additional net income of $8.0 million in 2007, with a positive impact on earnings per share of $0.01 per share in 2007. Management has determined that the impact of the adjustment was not material to the 2007 consolidated financial statements or to any of the prior periods' consolidated financial statements as reported.

(c)
On January 1, 2009, the Company adopted ASC Subtopic 815-40 (formerly EITF No. 07-5, Determining Whether an Instrument (or Embedded Feature) is Indexed to an Entity's Own Stock). ASC Subtopic 815-40 defines when adjustment features within contracts are considered to be equity-indexed, in order to determine whether an instrument meets the

KINROSS GOLD CORPORATION RECONCILIATION TO US GAAP                                                                         5

    definition of a derivative under ASC Topic 815 (formerly SFAS 133). The adoption of ASC Subtopic 815-40 affects the accounting for the CAD$ denominated common share purchase warrants, which are considered derivative instruments and are required to be measured at fair value. There is no similar requirement under Canadian GAAP. The cumulative effect of the change in accounting principle for US GAAP was recognized as an adjustment to the opening balance of retained earnings as at January 1, 2009 of $39.4 million with a corresponding increase in Share Purchase Warrant-Liability and a reclassification of $68.9 million from Share Purchase Warrants to Share Purchase Warrant-Liability. For the year ended December 31, 2010, there is an increase in Other income (expense) of $35.2 million, net of taxes of $nil (December 31, 2009 - $24.7 million and $nil) resulting in a Share Purchase Warrant-Liability at December 31, 2010 of $48.4 (December 31, 2009 - $83.6 million).

(d)
Effective January 1, 2007, the Company adopted CICA HB Section 3865, "Hedges" which effectively harmonized the differences between CDN GAAP and US GAAP on derivative instruments, with a few differences remaining. Under CDN GAAP, hedge gains may be netted against property, plant and equipment, if that was the hedged risk, whereas under US GAAP hedge gains are recorded in OCI. The application of ASC Topic 815 would have resulted in an increase as at December 31, 2010 to AOCI of $25.6 million (December 31, 2009 - $28.6 million), an increase of $14.7 million in the deferred income tax liability (December 31, 2009 - $15.0 million) and a corresponding $42.1 million increase in property, plant and equipment (December 31, 2009 - $43.9 million). The impact on net OCI was $3.0 million for 2010 (2009 - $2.2 million). The impact on the amortization of property, plant and equipment for 2010 was $2.3 million (2009 - $0.3 million), with taxes of $0.8 million (2009 - $0.1 million).

(e)
On January 1, 2009, the Company adopted ASC Subtopic 810-10 (formerly SFAS No. 160, Non-controlling Interests in Consolidated Financial Statements - an amendment of ARB No. 51). ASC Subtopic 810-10 requires an entity to clearly identify and present ownership interests in subsidiaries held by parties other than the entity in the consolidated financial statements within the equity section but separate from the entity's equity. It also requires the amount of consolidated net income attributable to the parent and to the non-controlling interest be clearly identified and presented on the face of the consolidated statement of income; changes in ownership interest be accounted for similarly, as equity transactions; and when a subsidiary is deconsolidated, any retained non-controlling equity investment in the former subsidiary and the gain or loss on the deconsolidation of the subsidiary be measured at fair value. The presentation and disclosure requirements of ASC Subtopic 810-10 were applied retrospectively. The adoption of ASC Subtopic 810-10 had no impact on the consolidated financial statements other than the change in presentation of previously reported line items of non-controlling interests.

(f)
On January 1, 2008, the Company adopted CICA HB Section 3031, "Inventories" which requires the reversal of previous inventory write downs to net realizable value when there is a subsequent increase in the value of inventories. Under US GAAP, subsequent reversals of inventory write downs are not permitted. As such, under US GAAP, on January 1, 2008 inventory would decrease by $14.4 million and accumulated deficit would increase by $11.0 million, net of taxes of $3.4 million. For 2010, $2.2 million of this inventory was sold, while $0.2 million of this inventory was sold in 2009.

(g)
In 2006 the Company adopted ASC Subtopic 715-20 (formerly SFAS 158, Employers' Accounting for Defined Benefit Pension And Other Post-Retirement Plans), which requires an employer to recognize the overfunded or underfunded status of a defined benefit post retirement plan as an asset or liability on its balance sheet and to recognize changes in that funded status, through OCI, in the year that the changes occur. As at December 31, 2010, under ASC Subtopic 715-20, an additional pension liability of $4.3 million (December 31, 2009 - $4.1 million) would be recorded, net of a long-term pension asset of $1.4 million (2009 - $1.6 million). The corresponding adjustment would be a net decrease to

6

    OCI of $3.1 million (2009 - $2.7 million), net of taxes of $1.3 million (2009 - $1.5 million). None of the additional liability relates to unrecognized prior service cost.

(h)
Under Kinross' accounting policy, development costs are capitalized when Proven and Probable Reserves are established. For Canadian GAAP reporting purposes, Proven and Probable Reserves are defined by National Instrument 43-101 ("NI 43-101") "Standards of Disclosure for Mineral Projects". The application of the Company's accounting policy for the purpose of US GAAP reporting results in development costs being capitalized when Proven and Probable Reserves are established as defined by Industry Guide 7 ("IG 7") published by the U.S. Securities and Exchange Commission. Lobo-Marte declared Proven and Probable Reserves on December 31, 2009 in accordance with NI 43-101, but has yet to declare Proven and Probable Reserves in accordance with IG 7. Therefore under US GAAP, costs incurred prior to the establishment of such Proven and Probable Reserves as defined by IG 7 are required to be expensed. This results in a different treatment of development costs between Canadian and US GAAP prior to the establishment of Proven and Probable Reserves under IG 7.

(i)
Under Canadian GAAP, the tax benefit from the recognition of previously unrecognized tax loss carryforwards as a result of unrealized gains on available-for-sale financial assets is recognized in income. Under US GAAP, such recognition is recorded in OCI. The impact of this adjustment is an increase in income tax expense and an increase in AOCI of $2.5 million.

    In addition, under US GAAP, a difference exists with respect to valuation allowance treatment arising from acquisitions, which resulted in a tax recovery of $39.4 million in the current year.

    Adjustments with no current period impact

(j)
In 1996, the Company issued convertible debentures in the aggregate principal amount of $146.0 million (CAD$200.0 million). The Company redeemed the convertible debentures on September 29, 2003, with a payment of $144.8 million (CAD$195.6 million) and accrued interest of $2.0 million (CAD$2.7 million). Originally, under CDN GAAP, the convertible debentures were accounted for in accordance with their substance and, as such, were presented in the financial statements in their liability and equity component parts. However, during 2005, the Company adopted amendments to CICA HB Section 3860, "Financial Instruments - Disclosure and Presentation" ("Section 3860"), which was retroactively applied to the accounting for the Company's convertible debentures. Under the amended Section 3860, the convertible debentures were bifurcated into a principal and an option component for accounting purposes. The principal component was recorded as debt and the option component recorded as equity. The principal component was accreted over the life of the convertible debentures through periodic charges to expense. On redemption, under CDN GAAP, the Company recognized a net gain of $15.4 million, which was apportioned between the principal and option components, based on their relative fair values compared to their carrying values. The Company recorded a loss on the principal component of $16.6 million and a gain on the option component of $32.0 million. The loss on the principal component was charged against income and the gain on the option component was accounted for as an increase in Contributed surplus. Under US GAAP, both the loss on the principal component and the gain on the option component would have been recognized in income. As a result, Accumulated deficit would decrease by $32.0 million with a corresponding decrease to Contributed surplus for the same amount.

(k)
CDN GAAP allows for the elimination of operating deficits by the reduction of stated capital attributable to common share capital with a corresponding offset to Accumulated deficit. For CDN GAAP, the Company eliminated operating deficits of $761.4 million and $5.3 million in 2003 and 1991, respectively. These reclassifications are not permitted by US GAAP and would require in each subsequent year a cumulative increase in Common share capital and a cumulative increase in deficit of $766.7 million.

KINROSS GOLD CORPORATION RECONCILIATION TO US GAAP                                                                         7

(l)
Prior to the introduction of CICA HB Section 3855, "Financial instruments" on January 1, 2007, under CDN GAAP, unrealized gains on long-term investments were not recorded. Under US GAAP, unrealized gains on long-term investments that are classified as securities available-for-sale are recorded, and the corresponding gain or loss is included as a component of comprehensive income. As at December 31, 2007, there was no longer a difference resulting from the two standards. As at December 31, 2006, $19.9 million was included as a component of AOCI. There was no tax impact on this adjustment.

(m)
Echo Bay Mines Ltd ("Echo Bay") transaction: On April 3, 2002, the Company exchanged its investment in debt securities of Echo Bay for 57.1 million common shares of Echo Bay. Based on US GAAP, it would have resulted in a gain included in earnings using fair value accounting. The fair value of the Echo Bay common shares received, under US GAAP, was $49.1 million, representing 57.1 million common shares at $0.86 each, being the closing market price of such shares on April 3, 2002, resulting in a gain of $42.5 million, after deducting the $6.6 million carrying value of the debt securities exchanged. This increased the carrying value of this investment, and the gain of $49.1 million was included in earnings for the year ended December 31, 2002. Under CDN GAAP, the cost of the Echo Bay common shares acquired on the exchange was recorded at the values of the securities given up. Since the fair value of the capital securities given up approximated their carrying value, no gain was recorded under CDN GAAP.

    Subsequent to the exchange of debt securities, the Company accounted for its share investment in Echo Bay as an available-for-sale security under US GAAP. At January 31, 2003, when the Company acquired the remaining outstanding common shares of Echo Bay, the Company retroactively restated its 2002 consolidated financial statements, prepared in accordance with US GAAP, to account for its share investment in Echo Bay on an equity basis. As a result, the Company reversed an unrealized gain of $21.8 million previously included in CDN GAAP OCI, increased its deficit by $0.7 million to reflect its share of equity losses for the period ended December 31, 2002 and correspondingly reduced the carrying value of its investment. In addition, the Company decreased long-term investments and recorded a share of loss in investee company of $1.0 million for the one month ended January 31, 2003 and increased long-term investments and recorded a share of income in investee company of $0.7 million during the year ended December 31, 2002. For US GAAP purposes, as a result of the business combination on January 31, 2003, the Company recognized an additional $40.8 million of goodwill representing the difference in carrying value of its share investment in Echo Bay between CDN GAAP and US GAAP.

    For the year ended December 31, 2003, the Company computed a goodwill impairment charge of $40.2 million thereby reducing the additional goodwill balance, under US GAAP, at December 31, 2003 to $0.6 million. As at December 31, 2010 and December 31, 2009, the additional goodwill remained at $0.6 million under US GAAP.

(n)
Under Canadian income tax legislation, a company is permitted to issue flow-through shares, whereby the company agrees to incur qualifying expenditures and renounce the related income tax deductions to the investors. The Company accounted for the issue of flow-through shares issued in 2001 using the deferral method in accordance with CDN GAAP. At the time of issue, the funds received were recorded as share capital. Qualifying expenditures were made in 2002. For US GAAP, the premium paid in excess of the market value of $1.1 million was credited to other liabilities and included in income as the qualifying expenditures were made. As at December 31, 2010 and December 31, 2009, the application of US GAAP would result in a decrease in Common share capital of $1.1 million and a corresponding reduction in Accumulated deficit.

(o)
ASC Topic 718 (formerly SFAS No. 148, Accounting for Stock-Based Compensation - Transition and Disclosure, an Amendment to SFAS No. 123) is similar to the Canadian accounting standard, CICA HB Section 3870, "Stock-Based Compensation and Other Stock-Based Payments", which was adopted in 2004. Accordingly, there is no CDN / US GAAP difference in the calculation of stock-based compensation expense. However, upon adoption of the amended Canadian

8

    accounting standard, stock option compensation of $2.5 million was recorded as a cumulative effect of the adoption as an adjustment to the opening balance of accumulated deficit with an offsetting adjustment to Contributed surplus. There was no tax impact on this adjustment. Under US GAAP, this adjustment would be reversed.

(p)
On January 1, 2009, the Company adopted EIC-173, Credit Risk and the Fair Value of Financial Assets and Financial Liabilities ("EIC-173"), for CDN GAAP, which requires the quantification of the impact of credit risk when calculating the fair value of financial assets and liabilities including derivatives. EIC-173 harmonizes the accounting treatment with ASC Subtopic 820-10 (formerly SFAS No. 157, Fair Value Measurements), which the Company adopted on January 1, 2008. Prior to the implementation of ASC Subtopic 820-10 and EIC-173, the Company considered the impact of credit risk on a qualitative basis only. Subsequent to 2008, the impact of this standard is reflected in our accounts under CDN GAAP. In 2008, the impact of adopting ASC Subtopic 820-10 was an increase of Other income (expense) of $14.6 million, net of taxes of $nil, a decrease in the current portion of Unrealized fair value of derivative liabilities of $2.1 million, a decrease in the long-term portion of the Unrealized fair value of derivative liabilities of $13.0 million, an increase in the current portion of Unrealized fair value of derivative assets of $0.1 million, an increase in the long-term portion of Unrealized fair value of derivative assets of $0.6 million and an increase in Accumulated other comprehensive income (loss) ("AOCI") of $1.6 million, net of taxes of $0.4 million.

NOTE 2 - STOCK-BASED COMPENSATION

The total intrinsic value of stock options exercised during 2010 is $34.3 million (2009 - $21.8 million, 2008 - $35.5 million).

As at December 31, 2010, the aggregate intrinsic value of stock options outstanding is $80.4 million (2009 - $19.9 million), while the intrinsic value of stock options that are exercisable is $80.2 million (2009 - $17.6 million).

The total cash settlement for the share-based liabilities paid related to the Restricted Share Units ("RSUs" and the Deferred Share Units ("DSUs") during 2010 is $0.1 million (2009 - $0.3 million, 2008 - $0.1 million). The total stock settlement related to the RSUs and DSUs during 2010 is 878,300 share units (2009 - 714,100 share units, 2008 - 453,400 share units).

The total fair value of shares vested during 2010 is $83.7 million (2009 - $7.2 million, 2008 - $27.4 million).

As at December 31, 2010, there was $12.1 million (2009 - $12.6 million) of total unrecognized compensation costs relating to non-vested stock options. We expect to recognize this expense over a weighted average period of 1.5 years (2009 - 1.4 years).

The tax benefit realized from stock options exercised during 2010 is $nil (2009 - $nil).

NOTE 3 - INCOME TAX

Income tax liabilities as at December 31, 2010 included a total of $83.4 million (2009 - $45.1 million) for unrecognized income tax benefits, excluding accrued interest and penalties. A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows:

(millions)        
Balance at January 1, 2010   $ 45.1  
Additions of tax positions on the acquisition of Red Back Mining & Dvoinoye     22.2  
Additions based on tax positions related to the current year     12.3  
Net settlement related to tax positions of prior years     2.5  
Foreign currency translation     1.3  
Balance at December 31, 2010   $ 83.4  

KINROSS GOLD CORPORATION RECONCILIATION TO US GAAP                                                                         9

As at December 31, 2010, $83.4 million (2009 - $45.1 million) of income tax for unrecognized tax benefits, if recognized in future periods, would impact the Company's effective tax rate. The Company does not believe that there will be any material changes in its unrecognized tax positions over the next twelve months.

The Company recognizes interest expense and penalty expense related to unrecognized tax benefits in interest expense. A total of $7.0 million was debited to interest expense during 2010 (2009 - credit of $32.9 million). At December 31, 2010, the Company had approximately $18.2 million (2009 - $11.2 million) of accrued interest and penalties recorded on its Consolidated Balance Sheet.

The following is a summary by major jurisdiction of the tax years that have been subject to examination by the tax authorities for the companies that are material to the Company's financial statements:

Jurisdiction Years Examined Up To*:  
Canada 2003  
United States 1994  
Brazil 2007 and 2008  
Chile 2007  
Russia 2008  
Ecuador Never  
Ghana 2008  
Mauritania 2009  
*
In Brazil, Kinross Brasil Mineracao SA was examined up to 2008 and Mineracao Serra Grande SA was examined up to 2007. Compania Minera Mantos do Oro in Chile has been subject to review, but has never been formally audited, by the tax authorities. Further, Fairbanks Gold Mining Inc. in the US has never been audited by the federal tax authorities.

As at December 31, 2009, the Company recorded an out of period adjustment of $14.4 million to recognize net future income tax assets associated with previously unrecognized temporary differences arising in previous years. Of this amount, a $4.3 million asset related to 2008, a $13.9 million asset related to 2007 and a $3.8 million liability related to 2006. Management determined that these adjustments were not material, either individually or in aggregate, to the year in which they arose or the period of correction.

NOTE 4 - FAIR VALUE MEASUREMENT DISCLOSURES

In 2008, the Company adopted ASC Subtopic 820-10 (formerly SFAS 157, Fair Value Measurements) for financial assets and liabilities that are measured at fair value on a recurring basis. ASC Subtopic 820-10 defines fair value, establishes a framework for measuring fair value under US GAAP, and requires expanded disclosures about fair value measurements. The primary assets and liabilities affected were available-for-sale securities, embedded derivatives, and derivative instruments. The adoption of ASC Subtopic 820-10 did not change the valuation techniques that the Company uses to value these assets and liabilities. The Company has elected to present information for derivative instruments on a net basis.

The fair value hierarchy established by ASC Subtopic 820-10 establishes three levels to classify the inputs to valuation techniques used to measure fair value. Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities. Level 2 inputs are quoted prices in markets that are not active, quoted prices for similar assets or liabilities in active markets, inputs other than quoted prices that are observable for the asset or liability (for example, interest rate and yield curves observable at commonly quoted intervals, forward pricing curves used to value currency and commodity contracts and volatility measurements used to value option contracts), or inputs that are derived principally from or corroborated by observable market data or other means. Level 3 inputs are unobservable (supported by little or no market activity). The fair value hierarchy gives the highest priority to Level 1 inputs and the lowest priority to Level 3 inputs.

10

Assets (liabilities) measured at fair value on a recurring basis as at December 31, 2010 include (in millions of United States dollars):

      Level One     Level Two     Level Three     Aggregate
Fair Value		    
Available-for-sale securities   $ 203.8   $ -   $ -   $ 203.8    
Derivative instruments     (48.4 )   (281.4 )   -     (329.8 )  
    $ 155.4   $ (281.4 ) $ -   $ (126.0 )  

The valuation techniques that are used to measure fair value are as follows:

Available-for-sale securities and Share Purchase Warrant liabilities:

The fair value of available-for-sale securities and Share Purchase Warrant liabilities are determined based on a market approach reflecting the closing price of each particular security at the balance sheet date. The closing price is a quoted market price obtained from the exchange that is the principal active market for the particular security, and therefore available-for-sale securities and Share Purchase Warrant liabilities are classified within Level 1 of the fair value hierarchy established by ASC Subtopic 820-10.

Derivative instruments:

The fair value of derivative instruments is based on quoted market prices for comparable contracts and represent the amount the Company would have received from, or paid to, a counterparty to unwind the contract a the market rates in effect at the balance sheet dates and therefore derivative instruments are classified within Level 2 of the fair value hierarchy established by ASC Subtopic 820-10.

KINROSS GOLD CORPORATION RECONCILIATION TO US GAAP                                                                         11

NOTE 5 - FINANCIAL INSTRUMENTS

The following tables provide additional details of our financial instruments.

Asset Derivatives
   Balance Sheet Location
   December 31, 2010
Fair Value
   December 31, 2009
Fair Value
  
Derivatives designated as hedging instruments              
  Gold and silver forward contracts   Unrealized fair value of derivative assets - current   $ 13.1   $ 0.5  
  Foreign currency forward contracts   Unrealized fair value of derivative assets - current     53.3     38.2  
  Energy forward contracts   Unrealized fair value of derivative assets - current     1.7     1.3  
          68.1     40.0  
 
Gold and silver forward contracts
 
Unrealized fair value of derivative assets
 
 
0.1
 
 
1.9
 
  Foreign currency forward contracts   Unrealized fair value of derivative assets     1.7     -  
          1.8     1.9  

Derivatives not designated as hedging instruments
 
 
 
 
 
 
 
  Gold and silver forward contracts   Unrealized fair value of derivative assets - current     65.3     -  
  Gold contract related to Julietta sale   Unrealized fair value of derivative assets - current     -     4.3  
          65.3     4.3  
  Gold and silver forward contracts   Unrealized fair value of derivative assets     0.8     -  
          0.8     -  
Total asset derivatives   $ 136.0   $ 46.2  

12

 
Liability Derivatives
   Balance Sheet Location
   December 31, 2010
Fair Value
   December 31, 2009
Fair Value
  
Derivatives designated as hedging instruments              
  Gold and silver forward contracts   Unrealized fair value of derivative liabilities - current   $ 292.9   $ 130.5  
  Foreign currency forward contracts   Unrealized fair value of derivative liabilities - current     -     0.1  
          292.9     130.6  
  Gold and silver forward contracts   Other long-term liabilities     52.7     204.5  
  Interest rate swap contracts   Other long-term liabilities     0.4     5.5  
          53.1     210.0  

Derivatives not designated as hedging instruments
 
 
 
 
 
 
 
  Gold and silver forward contracts   Unrealized fair value of derivative liabilities - current     66.4     0.2  
  Share purchase warrant liability   Unrealized fair value of derivative liabilities - current     48.4     83.6  
  Total return swap   Unrealized fair value of derivative liabilities - current     -     0.2  
          114.8     84.0  
  Gold and silver forward contracts   Other long-term liabilities     1.0     -  
  Interest rate swap contracts   Other long-term liabilities     4.0     2.8  
          5.0     2.8  
Total liability derivatives   $ 465.8   $ 427.4  

KINROSS GOLD CORPORATION RECONCILIATION TO US GAAP                                                                         13

 
    Amount of Gain or (Loss)
Recognized in OCI on
Derivative
(Effective Portion)
       Amount of Gain or (Loss)
Reclassified from
AOCI into Income
(Effective Portion)
    
Derivatives in Cash Flow Hedging
Relationships
   For the
year ended
December 31,
2010
   For the
year ended
December 31,
2009
   Location of Gain or (Loss)
Reclassified from
Accumulated OCI
into Income
(Effective Portion)
   For the
year ended
December 31,
2010
   For the
year ended
December 31,
2009
    
Gold and silver forward contracts   $ (133.9 ) $ (203.1 ) Metal sales   $ 123.5   $ 14.1    
Energy forward contracts     1.5     3.9   Cost of sales     (1.1 )   8.0    
Foreign currency forward contracts     62.7     78.1   Cost of sales     (48.1 )   20.3    
Foreign currency forward contracts     6.1     3.2   General and administrative     (2.0 )   (4.0 )  
Interest rate swap contracts     1.9     2.5   Other income (expense) - net     (4.8 )   -    
    $ (61.7 ) $ (115.4 )     $ 67.5   $ 38.4    
 
    Amount of Gain or (Loss)
Recognized in Income on
Derivative
      
Derivatives not designated
as Hedging Relationships
   For the
year ended
December 31,
2010
   For the
year ended
December 31,
2009
   Location of Gain or (Loss)
Recognized in Income
on Derivatives
  
Interest rate swap contracts   $ (7.6 ) $ (3.5 ) Other income (expense) - net  
Foreign currency forward contracts     5.6     0.5   Other income (expense) - net  
Gold contract related to Julietta sale     2.3     5.1   Other income (expense) - net  
Fair value of Canadian dollar denominated share purchase warrants     35.2     24.7   Other income (expense) - net  
    $ 35.5   $ 26.8      

Amount excluded from the
assessment of Hedge
Effectiveness
 
 
 
 
 
 
 
Gold and silver forward contracts   $ (17.8 ) $ (0.9 ) Other income (expense) - net  
Energy forward contracts     (0.1 )   (0.1 ) Other income (expense) - net  
    $ (17.9 ) $ (0.8 )    

14

NOTE 6 - LONG-TERM DEBT

The priority in which the debt will be paid off is as follows:

Long-term debt and credit facility     Nominal Amount
(Millions of USD)		    
Corporate term loan facility   $ 59.1    
Paracatu capital leases     22.3    
Senior convertible debt     419.5    
Crixás bank loan and other     4.4    
      505.3    
Less: current portion     (48.4 )  
Long-term debt   $ 456.9    

NOTE 7 - BUSINESS COMBINATION

On September 17, 2010, the Company completed the acquisition of all of the issued and outstanding shares of Red Back Mining Inc. ("Red Back") that it did not previously own. This acquisition was completed in order to increase the Company's metal reserves and production. Please refer to the Note 4(vii) of the consolidated financial statements for the year ended December 31, 2010 for details of the acquisition of Red Back. The consolidated statement of operations of the Company for year ended December 31, 2010 includes $194.8 million of revenue and $20.2 million of operating earnings for Red Back since its acquisition.

    Adjustments to CDN GAAP

(1)
As consideration for the acquisition, the Company issued 416.4 million common shares and 25.8 million US$ warrants to the shareholders of Red Back, as well as 8.7 million fully vested replacement options to the option holders of Red Back.

    Under CDN GAAP, the equity consideration was measured at fair value at the date the acquisition was announced, August 2, 2010. The fair value of the common shares, warrants, and replacement options issued was $6,549.3 million, $117.7 million, and $69.8 million, respectively, resulting in a total fair value of $6,736.8 million, which was based on an average share price of the Company's common shares of $15.73 per share for a period before and after August 2, 2010.

    Under US GAAP, the equity consideration was measured at fair value on the acquisition date, September 17, 2010. The fair value of the common shares, warrants, and replacement options issued was $7,678.3 million, $161.3 million, and $91.2 million, respectively, resulting in a total fair value of $7,930.8 million, which was based on a share price of $18.44 per share, being the closing market price of the Company's common shares on September 17, 2010. The difference in the measurement of the total equity consideration under US GAAP resulted in an increase in the purchase price of $1,194.0 million with a corresponding increase in goodwill.

(2)
Under CDN GAAP, the Company's initial investment in Red Back was included in the total purchase price of the acquisition at its original cost of $580.3 million. Under US GAAP, the Company's initial investment in Red Back was included in the total purchase price of the acquisition at its fair value on the acquisition date, September 17, 2010. The fair value of the Company's initial investment in Red Back on the acquisition date was $789.6 million, representing 24.0 million shares at $32.90 per share, being the closing market price of Red Back's shares on September 17, 2010. The difference in the measurement of Kinross' initial investment in Red Back under US GAAP resulted in an increase in the purchase price of $209.3 million with a corresponding increase in goodwill.

KINROSS GOLD CORPORATION RECONCILIATION TO US GAAP                                                                         15

    Prior to the acquisition, the Company accounted for its investment in Red Back shares as an available-for-sale investment under both CDN GAAP and US GAAP. For CDN GAAP, unrealized gains recorded in OCI were reversed against the carrying value of the investment. Under US GAAP, unrealized gains recorded in OCI of $209.3 million were reversed through net earnings, corresponding with the fair value of the Company's initial investment in Red Back on the date of acquisition.

(3)
Under CDN GAAP, $41.5 million of acquisition-related costs were included in the determination of the purchase price of the acquisition. Under US GAAP, acquisition-related costs were expensed in the period in which the costs are incurred and the services received, and were not included in the determination of the purchase price. This difference in the treatment of acquisition-related costs under US GAAP resulted in a decrease in the purchase price of $41.5 million with a corresponding decrease in goodwill.

(4)
Under US GAAP, the identifiable assets acquired, the liabilities assumed, and any non-controlling interest in the acquiree is measured at fair values on the acquisition date. As a result of the Red Back acquisition, the Company expanded operations into West Africa. In Ghana, the Company holds a 90% interest in the Chirano Gold Mine with the Government of Ghana having the right to the remaining 10% interest. In Mauritania, the Company holds a 100% interest in the Tasiast Mine. Accordingly, the Company recognized a non-controlling interest of 10% in the Chirano Gold Mine.

    Under CDN GAAP, this acquired non-controlling interest was measured at its book value of $3.9 million. Under US GAAP, this acquired non-controlling interest was measured at its fair value of $57.6 million, being 10% of the preliminary fair value assigned to the net assets of the Chirano Gold Mine acquired on September 17, 2010, the acquisition date. This difference in the measurement of non-controlling interest under US GAAP resulted in a decrease to goodwill of $53.7 million.

    Under CDN GAAP, the fair values of CGML's assets were measured at 90% of their fair value. However, for US GAAP, these fair values were measured at 100% of their fair value, with the corresponding 10% increase being recognized as an increase to non-controlling interest. This difference in the measurement of the fair value of CGML's assets for US GAAP resulted in an increase in property, plant and equipment (including mineral interests) of $66.9 million, an increase in depreciation expense of $3.0 million, an increase in future income and mining tax liabilities of $16.5 million, and a net decrease in goodwill of $49.5 million.

As a result of these adjustments, the following tables set forth the total consideration paid and a preliminary allocation of this purchase price to the assets and liabilities acquired, based on preliminary estimates of fair value under US GAAP.

Total consideration paid under US GAAP of $8,720.4 million was calculated as follows:

(expressed in millions of United States dollars)        
Common shares issues (416.4 million)   $ 7,678.3  
Fair value of warrants issued (25.8 million)     161.3  
Fair value of options issued (8.7 million)     91.2  
Fair value of Red Back shares, previously acquired     789.6  
Total purchase price   $ 8,720.4  

16

The following table sets forth the preliminary allocation under US GAAP of the purchase price to assets and liabilities acquired, based on preliminary estimates of fair value. Final valuations of assets and liabilities are not yet complete due to the timing of the acquisition and the inherent complexity associated with the valuations. This is a preliminary purchase price allocation and therefore subject to adjustment over the period to completion of the valuation process and analysis of resulting tax effects:

(expressed in millions of United States dollars)          
Cash and cash equivalents   $ 742.6    
Accounts receivable and other assets     27.0    
Inventories     115.2    
Property, plant and equipment (including mineral interests)     1,832.7    
Accounts payable and accrued liabilities     (103.4 )  
Future income and mining tax liabilities     (328.9 )  
Other long-term liabilities     (34.3 )  
Non-controlling interest     (57.6 )  
Goodwill     6,527.1    
Total purchase price   $ 8,720.4    

The goodwill recognized is attributed to: expected additional value from identified exploration targets acquired from Red Back; the optionality to develop additional, higher-cost reserves and to intensify efforts to develop the more promising acquired properties and reduce efforts at developing the less promising properties in the future; and the going concern value of the Company's capacity to replace and augment reserves through completely new discoveries whose value is not reflected in any other valuation.

On a preliminary basis, all of the goodwill was assigned to the Corporate and Other segment. None of the goodwill recognized is expected to be deductible for tax purposes.

    Basis of Presentation

The following unaudited pro forma results of operations, prepared in accordance with US GAAP, have been prepared as if the Red Back acquisition had occurred at the beginning of each period presented. The unaudited pro forma consolidated financial statement information is not intended to be indicative of the results that would actually have occurred, or the results expected in future periods, had the events reflected herein occurred on the dates indicated. Any potential synergies that may be realized and integration costs that may be incurred have been excluded from the unaudited pro forma financial statement information, including Red Back transaction costs.

    Pro Forma Assumptions and Adjustments

Certain adjustments have been reflected in this unaudited pro forma consolidated statement of operations to illustrate the effects of purchase accounting where the impact could be reasonably estimated.

(a)
To increase depreciation expense to reflect depreciation of the fair value increment on property, plant, and equipment (including mineral interests).

(b)
To expense exploration costs that had been deferred.

(c)
To tax effect all the above listed adjustments.

KINROSS GOLD CORPORATION RECONCILIATION TO US GAAP                                                                         17

Pro forma Financial Statements

Statement of Operations

          For the Year Ended
December 31,
  
(unaudited) - (expressed in millions of United States dollars, except per share and share amounts)   2010 Pro forma
consolidated		   2009 Pro forma
consolidated		  
Revenue         3,337.9   2,730.5  
Earnings before taxes and other items         1,302.8   734.0  
Net earnings         1,032.8   587.3  

NOTE 8 - RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS

In December 2010, the FASB issued ASU 2010-29, Business Combinations (Topic 805): Disclosure of Supplementary Pro Forma Information for Business Combinations. The amendments in this ASU affect any public entity as defined by Topic 805, Business Combinations, that enters into business combinations that are material on an individual or aggregate basis. The amendments in this ASU specify that if a public entity presents comparative financial statements, the entity should disclose revenue and earnings of the combined entity as though the business combination(s) that occurred during the current year had occurred as of the beginning of the comparable prior annual reporting period only. The amendments also expand the supplemental pro forma disclosures to include a description of the nature and amount of material, nonrecurring pro forma adjustments directly attributable to the business combination included in the reported pro forma revenue and earnings. The amendments are effective prospectively for business combinations for which the acquisition date is on or after the beginning of the first annual reporting period beginning on or after December 15, 2010. The Company is still assessing the potential impact of adoption of this ASU but does not expect a significant impact on the consolidated financial statements.

In December 2010, the FASB issued ASU 2010-28, Intangibles - Goodwill and Other (Topic 350): When to Perform Step 2 of the Goodwill Impairment Test for Reporting Units with Zero or Negative Carrying Amounts (a consensus of the FASB Emerging Issues Task Force). The amendments in this ASU modify Step 1 of the goodwill impairment test for reporting units with zero or negative carrying amounts. For those reporting units, an entity is required to perform Step 2 of the goodwill impairment test if it is more likely than not that a goodwill impairment exists. The amendments in this ASU are effective for fiscal years, and interim periods within those years, beginning after December 15, 2010. The Company is still assessing the potential impact of adoption of this ASU but does not expect a significant impact on the consolidated financial statements.

In April 2010, the FASB issued ASU 2010-13, Compensation - Stock Compensation (Topic 718): Effect of Denominating the Exercise Price of a Share-Based Payment Award in the Currency of the Market in Which the Underlying Equity Security Trades. This ASU provides amendments to Topic 718 to clarify that an employee share-based payment award with an exercise price denominated in the currency of a market in which a substantial portion of the entity's equity securities trades should not be considered to contain a condition that is not a market, performance, or service condition. Therefore an entity would not classify such an award as a liability if it otherwise qualifies as equity. The amendments in this ASU are effective for fiscal years and interim periods within those fiscal years beginning on or after December 15, 2010 and are not expected to have a significant impact on the Company's consolidated financial statements.

In February 2010, the FASB issued ASU 2010-09, Subsequent Events (Topic 855): Amendments to Certain Recognition and Disclosure Requirements. This ASU amended the guidance on subsequent events and will no longer require that an SEC filer

18


disclose the date through which subsequent events have been evaluated. The amendment is effective upon issuance. The adoption of this ASU had no impact on the consolidated financial statements.

In January 2010, the FASB issued ASU 2010-06, Improving Disclosures about Fair Value Measurements, which provides amendments to Subtopic 820-10, Fair Value Measurements and Disclosures (formerly SFAS No. 157, Fair Value Measurements). The new disclosures now required by the amended guidance include the amounts of significant transfers in and/or out of Level 1 and Level 2 fair value measurements and the reasons for the transfers, and a reconciliation of the activities in Level 3 fair value measurements on a gross basis. In addition, this ASU clarifies the existing disclosure requirements for level of disaggregation, and disclosures about inputs and valuation techniques. The new disclosures and clarifications of existing disclosures are effective for annual or interim reporting periods beginning after December 15, 2009, except for the requirement to provide the Level 3 activity for purchases, sales, issuances, and settlements on a gross basis. Those disclosures are effective for fiscal years beginning after December 15, 2010. Other than the required disclosures (see note 4), the adoption of this ASU had no impact on the consolidated financial statements.

On January 1, 2010, the Company adopted ASC Topic 810 (formerly SFAS No. 167, Amendments to FASB Interpretation No. 46(R)). ASC Topic 810 is intended to address: the effects on certain provisions of ASC Subtopic 810-10 (formerly FASB Interpretation No. 46 (revised December 2003), Consolidation of Variable Interest Entities), as a result of the elimination of the qualifying special-purpose entity concept in SFAS 166; and concerns about the application of certain key provisions of ASC Subtopic 810-10, including those in which the accounting and disclosures under the Interpretation did not always provide timely and useful information about an enterprise's involvement in a variable interest entity. The adoption of ASC Topic 810 did not have an impact on the consolidated financial statements.

On January 1, 2010, the Company adopted ASC Topic 860 (formerly SFAS No. 166, Accounting for Transfers of Financial Assets - an amendment of FASB Statement No. 140). ASC Topic 860 (formerly SFAS No. 140, "Accounting for Transfers and Servicing of Financial Assets and Extinguishments of Liabilities"), eliminates the concept of a qualifying special purpose entity; clarifying and amending the derecognition criteria for a transfer to be accounted for as a sale; amending and clarifying the unit of accounting for sale accounting; and requiring that a transferor initially measure at fair value and recognize all assets obtained and liabilities incurred as a result of a transfer of an entire financial asset or group of financial assets accounted for as a sale. The adoption of ASC Topic 860 did not have an impact on the consolidated financial statements.

Other information

(a)
The terms "proven and probable reserves", "exploration", "development", and "production" have the same meaning under both US and CDN GAAP. Exploration costs incurred are expensed at the same point in time based on the same criteria under both US and CDN GAAP. In addition, mining related costs are only capitalized after proven and probable reserves have been designated under both US and CDN GAAP.

(b)
Under CDN GAAP, Kinross proportionately consolidates its interests in incorporated joint ventures. These investments would be accounted for using the equity method under US GAAP. The Company relies on an accommodation provided for in Item 17(c)(2)(vii) of SEC Form 20-F where the differences that would result from using proportionate consolidation for investments in joint ventures pursuant to CDN GAAP is not required to be included in the US GAAP Note. Each of the joint ventures qualifies for this accommodation on the basis that it is an operating entity, the significant financial and operating policies of which are, by contractual arrangement, jointly controlled by all parties having an equity interest in the entity.

KINROSS GOLD CORPORATION RECONCILIATION TO US GAAP                                                                         19