SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 6-K
REPORT OF FOREIGN PRIVATE ISSUER
PURSUANT TO RULE 13a-16 OR 15d-16
UNDER THE SECURITIES EXCHANGE ACT OF 1934
For the month of February, 2018
Commission File Number: 001-13382
KINROSS GOLD CORPORATION
(Translation of registrant's name into English)
17th Floor, 25 York Street,
Toronto, Ontario M5J 2V5
(Address of principal executive offices)
Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40F:
Form 20-F ¨ Form 40-F x
Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1):_____
Note: Regulation S-T Rule 101(b)(1) only permits the submission in paper of a Form 6-K if submitted solely to provide an attached annual report to security holders.
Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7):_____
Note: Regulation S-T Rule 101(b)(7) only permits the submission in paper of a Form 6-K if submitted to furnish a report or other document that the registrant foreign private issuer must furnish and make public under the laws of the jurisdiction in which the registrant is incorporated, domiciled or legally organized (the registrant's "home country"), or under the rules of the home country exchange on which the registrant's securities are traded, as long as the report or other document is not a press release, is not required to be and has not been distributed to the registrant's security holders, and, if discussing a material event, has already been the subject of a Form 6-K submission or other Commission filing on EDGAR.
Indicate by check mark whether by furnishing the information contained in this Form, the registrant is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934.
Yes ¨ No x
If "Yes" is marked, indicate below the file number assigned to the registrant in connection with Rule 12g3-2b:
This Current Report on Form 6-K, dated Feb 14, 2018 is specifically incorporated by reference into Kinross Gold Corporation's Registration Statements on Form S-8 [Registration No. 333-217099, filed on April 3, 2017 and Registration Nos. 333-180824, 333-180823 and 333-180822, filed on April 19, 2012.]
Page 2
This report on Form 6-K is being furnished for the sole purpose of providing a copy of the press release dated February 14, 2018 in which Kinross Gold Corporation announced the acquisition of power plants in Brazil to secure long-term, low cost power for Paracatu mine.
INDEX
Table of Contents
SIGNATURES
EXHIBIT INDEX
99.1 | Press Release dated February 14, 2018 |
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SIGNATURES
Pursuant to the requirements of Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
KINROSS GOLD CORPORATION | |
Signed: //Kathleen M. Grandy// | |
Vice President, Assistant General Counsel and Corporate Secretary |
February 14, 2018
Exhibit 99.1
Kinross Gold Corporation
25 York Street, 17th Floor Toronto, ON Canada M5J 2V5 |
NEWS RELEASE
Kinross announces acquisition of power plants in Brazil to secure long-term, low-cost power for Paracatu mine
(This news release contains forward-looking information about expected future events and financial and operating performance of the Company. All dollar amounts are expressed in U.S. dollars, unless otherwise noted.)
Toronto, Ontario – February 14, 2018 – Kinross Gold Corporation (TSX:K; NYSE:KGC) (“Kinross”) is pleased to announce that its wholly-owned subsidiary, Kinross Brasil Mineraçao, has agreed to acquire two hydroelectric power plants in Brazil from a subsidiary of Gerdau SA (NYSE: GGB) (“Gerdau”) for $257 million1. The two plants are expected to secure a long-term supply of power for Kinross’ Paracatu mine, resulting in lower production costs over the life of mine.
Kinross expects to fund the acquisition by pursuing debt financing of approximately $200 million, with the balance from existing liquidity, which totalled approximately $2.6 billion at year-end 2017.
Strategic rationale for acquisition
· | Lower production costs – expected to lower production cost of sales by approximately $80 per ounce over the life of mine. |
· | Attractive returns – expected to generate a levered internal rate of return of approximately 15% - 30%, depending on the final terms of a planned debt financing. |
· | De-risked supply chain – expected to secure approximately 70% of Paracatu’s anticipated power needs for the life of mine at a low, fixed cost and reduces market exposure for a key input in an environment where the Company expects input costs to rise. |
· | Strategic investment in core asset – expected to further strengthen and enhance Paracatu, a large, long-life operation that is a cornerstone asset in Kinross’ portfolio. |
Kinross has agreed to acquire the Barra dos Coqueiros (BCQ) and Caçu hydro power plants located on the Claro River in the neighbouring state of Goias, approximately 660 kms west of Paracatu. Additional infrastructure is not required for BCQ and Caçu to provide power to Paracatu due to Brazil’s well-developed infrastructure and existing market mechanisms for the transmission and utilization of power.
The acquisition is expected to allow Kinross to significantly lower operating costs at Paracatu by eliminating approximately 70% of future power purchases. In addition, Brazilian legislation provides reduced power tariffs to companies that generate their own power supply. Due to reduced tariffs, the Company expects savings of approximately $15 per ounce, which is included as part of the total expected savings of approximately $80 per ounce of production cost of sales over the life of mine. The plants are also expected to have relatively low operating and maintenance costs, as is typical with hydroelectric power plants.
Both plants have been in operation since 2010 and have a total installed capacity of 155 MW (BCQ - 90 MW; Caçu - 65 MW), and are expected to supply approximately 70% of Paracatu’s future power needs. The remaining 30% of Paracatu’s power demand is expected to continue to be fulfilled by third party suppliers under fixed term power purchase agreements. The operating concessions for both plants expire in 2037, five years after Paracatu’s mine life is expected to end.
To help facilitate a transition of ownership and management, Kinross expects to assume the existing BCQ and Caçu operations and maintenance contract. Kinross also self-generates power at Tasiast, Kupol and Dvoinoye.
1 Assumes foreign exchange rate of 3.25 Brazilian reais to the U.S. dollar.
www.kinross.com |
Kinross Gold Corporation
25 York Street 17th Floor Toronto, ON, Canada M5J 2V5 |
The acquisition is expected to close in approximately three to six months, subject to regulatory approvals and the satisfaction of other conditions precedent.
BofA Merrill Lynch is acting as financial advisor to Kinross, with Pinheiro Neto Advogados and Dechert LLP acting as legal advisors.
About Kinross Gold Corporation
Kinross is a Canadian-based senior gold mining company with mines and projects in the United States, Brazil, Russia, Mauritania, Chile and Ghana. Kinross’ focus is on delivering value based on the core principles of operational excellence, balance sheet strength, disciplined growth and responsible mining. Kinross maintains listings on the Toronto Stock Exchange (symbol:K) and the New York Stock Exchange (symbol:KGC).
Media Contact | |
Louie Diaz | |
Director, Corporate Communications | |
phone: 416-369-6469 | |
louie.diaz@kinross.com | |
Investor Relations Contact | |
Tom Elliott | |
Senior Vice-President, Investor Relations and Corporate Development | |
phone: 416-365-3390 | |
tom.elliott@kinross.com |
Cautionary statement on forward-looking information
All statements, other than statements of historical fact, contained in this news release, including any information as to the future financial or operating performance of Kinross, constitute “forward-looking information” or “forward-looking statements” within the meaning of certain securities laws, including the provisions of the Securities Act (Ontario) and the “safe harbor” provisions under the United States Private Securities Litigation Reform Act of 1995 and are based on the expectations, estimates and projections of management as of the date of this news release, unless otherwise stated.Forward-looking statements contained in this news release include, but are not limited to, those under the heading "Strategic rationale for acquisition." Forward-looking statements are necessarily based upon a number of estimates and assumptions that, while considered reasonable by Kinross as of the date of such statements, are inherently subject to significant business, economic and competitive uncertainties and contingencies. The estimates and assumptions of Kinross contained in this news release, which may prove to be incorrect, include, but are not limited to: (i) that Kinross will complete the acquisition in accordance with, and on the timeline contemplated by, the terms and conditions of the relevant agreements, on a basis consistent with our expectations; (ii) the anticipated impact of the acquisition on reducing production cost of sales; (iii) the internal rate of return expected to be realized as a result of the acquisition; (iv) future prices for electricity in Brazil being consistent with our expectations; (v) there being no significant disruptions in the operation of the power plants following completion of the acquisition; (vi) that existing infrastructure and market mechanisms are adequate for the power plants to provide power to Paracatu; (vii) that existing tariffs in Brazil for companies that generate their own power remain available and unchanged; (viii) the operating and maintenance costs of the power plants being consistent with our expectations; (ix) the life of mine estimate for Paracatu; (x) that Kinross will be able to acquire sufficient additional power from other suppliers; (xi) that the existing operations and maintenance agreement for the power plants can be assumed by Kinross and maintained on terms and conditions consistent with our expectations; (xii) the future power needs of Paracatu being consistent with our expectations; (xiii) output from the power plants being consistent with our expectations; (xiv) the ability of Kinross to complete a debt financing in the amount contemplated with timing complementary to closing the acquisition; and (xv) the regulatory and legislative regime regarding mining, electricity production and transmission (including rules related to power tariffs) in Brazil being consistent with our expectations.
The forward-looking information set forth in this news release is subject to various risks and other factors which could cause actual results to differ materially from those expressed or implied in the forward-looking information, including the risk that the transaction will not be completed for any reason, Kinross’ ability to successfully integrate the acquisition of the power plants into existing operations, and operating or technical difficulties in connection with mining, development or power generation and transmission activities. Certain of these risks and other factors are described in more detail in Kinross’ most recently filed Annual Information Form in the section entitled “Risk Factors” and the “Risk Analysis” section of our most recently filed Management’s Discussion and Analysis, to which readers are referred and which are incorporated by reference in this news release. In addition, all forward-looking statements made in this news release are qualified by the full “Cautionary Statement” in such Annual Information Form and the “Cautionary Statement on Forward-Looking Information” in such Management’s Discussion and Analysis. These risks and other factors are not exhaustive. Kinross disclaims any intention or obligation to update or revise any forward-looking statements whether as a result of new information, future events or otherwise, or to explain any material difference between subsequent actual events and such forward-looking statements, except to the extent required by applicable law.
p. 2 Kinross announces acquisition of power plants in Brazil | www.kinross.com |
Kinross Gold Corporation
25 York Street 17th Floor Toronto, ON, Canada M5J 2V5 |
Other information
Where we say "we", "us", "our", the "Company", or "Kinross" in this news release, we mean Kinross Gold Corporation and/or one or more or all of its subsidiaries, as may be applicable.
Source Code: Kinross Gold Corporation
p. 3 Kinross announces acquisition of power plants in Brazil | www.kinross.com |
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