Growth through Exploration
We continue to pursue an aggressive exploration strategy focused
on five regions: the North and South Andean Cordilleras, Brazilian
Craton, North American Cordillera, and far eastern Russia. To
increase our exposure to quality projects, we have broadened our
base of generative and Greenfields exploration activity, while
using a disciplined review and prioritization process to narrow
down opportunities to high-value, high-reward targets.
The total budgeted expensed exploration is forecasted to be
approximately $79 million for 2010, with approximately 30% to be
invested in Russia, 25% in the Andean Region of South America, 21%
in North America, 10% in Ecuador, 10% in Brazil and 3% in Mexico.
An additional $17 million will be spent for technical and
environmental services.
Greenfields, near-mine and advanced-stage project expenditures
will account for approximately 70% of 2010 exploration
spending.
Kinross is also focused on establishing exploration and
mutually-beneficial partnerships with promising junior exploration
companies. A selection of these partnerships is featured below.
Partnerships
B2Gold Corporation (B2Gold) is a Canadian minerals production
and exploration company with assets in Colombia, Nicaragua and
northeastern Russia. In February 2007, Kinross and B2Gold entered
into an agreement to explore the Kupol East and West licenses that
surround and adjacent to Kinross' Kupol Mine in Chukotka, Russia.
Under the agreement B2Gold has the right to acquire a 37.5%
interest in the licenses from Kinross, with the companies incurring
expected expenditure of US$10 million by December 31, 2009.
Thereafter, further exploration obligations will be incurred in pro
rata to their respective economic interests.
Brett Resources Incorporated (Brett) is a Canadian minerals
exploration company whose mandate is the discovery, acquisition,
and development of precious metals systems, with particular
expertise in Canada and Latin America. In June 2006, Kinross and
Brett reached an agreement whereby Kinross can acquire a 66.7%
interest in the Santa Clara project in El Salvador by funding US$5
million over four years.
In March 2008, Kinross and Brett also announced an exploration
alliance to review properties of interest in British Columbia and
the Yukon. Under the alliance, Brett will spend US$2 million
reviewing properties in which Kinross can elect to obtain a 50%
interest upon acquisition by Brett.
Full Metal Minerals Corporation (Full Metal) is a Canadian
minerals development-exploration company with a focus on mine
development, exploration, and selective partnerships and
acquisitions. In February 2008, Kinross and Full Metal entered into
an exploration alliance to explore for gold deposits in Alaska. The
alliance will utilize Kinross' extensive historical database to
generate new targets and Full Metal's exploration expertise. Under
revised terms of the alliance, Kinross will fund US$1.0 million and
Full Metal funds US$0.5 million for participating interest of 60%
and 40% respectively. The first $3 million in expenditures on any
given property shall be funded on a 60/40 pro-rata basis.
Riverside Resources Incorporated (Riverside) is a Canadian
generative exploration company that joint-ventures and acquires
early-stage projects with significant potential in Mexico and the
USA. In January 2009, Kinross and Riverside announced an
exploration alliance to explore for precious metal deposits in the
Mesa Central of Mexico. The alliance will utilize Riverside's
proprietary database to generate new targets. Kinross and Riverside
will invest US$0.8 million and US$0.3 million, respectively, to
fund exploration over two years to identify potential projects for
joint venture. Kinross may elect to form a joint venture with
Riverside on an initial 50/50 percentage basis in any of the
projects identified or acquired as a result of the Alliance.
Laurentian Goldfields Corporation (Laurentian) is a Canadian
minerals exploration company with a strategy of generating gold
targets in Canada's frontier exploration areas. In August 2009,
Kinross and Laurentian commenced an exploration alliance to explore
for economic deposits in the Uchi Subprovince of Canada. Under an
initial one year term, Kinross and Laurentian will invest CDN$0.4
million and CDN$0.1 million, respectively, for early-stage
exploration to identify new gold exploration projects. Kinross may
elect to form a joint venture with Laurentian on an initial 50/50
percentage basis in any of the projects identified and acquired as
a result of the Alliance.
Teryl Resources Corporation (Teryl) is a Canadian minerals
exploration company with a focus in Alaska. Kinross and Teryl have
an 80/20 percentage joint venture agreement to explore the Gil
Mineral Claims that are located adjacent to Kinross' Fort Knox
Mine. The joint venture commenced in October 1999 and to date has
incurred exploration expenditures of US$7.5 million.
Focused Strategy
In 2010, our exploration efforts will support Kinross' strategy
to rejuvenate its asset portfolio through organic growth. Specific
objectives include continuing to upgrade the exploration pipeline
with new projects, executing on existing exploration programs and
growing reserves.