LETTER TO SHAREHOLDERS

While gold price volatility is beyond our control, Kinross is keenly focused on the operating fundamentals that generate shareholder value regardless of the gold price.

By prioritizing cash flow and margins early in the year, we were ahead of the curve when the gold price fell. We then ramped up our cost reduction efforts, and closed offices in Mexico and Vancouver, reduced exploration spending, and streamlined our organization with the consolidation of our North and South America operations into a single Americas region. Headcount was reduced by approximately 1,000 people, and overhead cost was cut by approximately 12%. Thanks to these efforts, we beat our 2013 guidance on all-in sustaining cost, coming in at $1,063 per gold ounce.

Perhaps the most compelling evidence of our commitment to reducing spending and lowering costs is our reduction in capital expenditures. When I became CEO in August 2012, our capital spend for the year was projected to be at $2.2 billion. By the end of 2012, we’d brought it down to $1.9 billion. We began 2013 with a forecast capital expenditure of $1.6 billion, but were able to bring it down further to $1.26 billion, a $340-million reduction. This year, we are forecasting a capital spend of $675 million – a little more than half of what we spent last year and less than one-third of what was budgeted in 2012.

In short, we have focused on the fundamentals, made tough decisions and done what we said we would do. We decided not to proceed with development of the FDN project after being unable to reach an acceptable development agreement with the Government of Ecuador. We also suspended mining at La Coipa, a high-cost operation with marginal resources. And, when a falling gold price underscored the need to preserve balance sheet strength, we suspended the dividend.

All of this hard work, aimed at maximizing margins and cash flow, has helped to reinforce our balance sheet. While gold price volatility is beyond our control, Kinross is keenly focused on the operating fundamentals that generate shareholder value regardless of the gold price. Key to that is a strong balance sheet, which allows us to make measured decisions, to be flexible, and to pursue opportunities when they arise. With $1.15 billion in adjusted operating cash flow in 2013, $2.3 billion in liquidity, no material debt maturities until 2016, and the issuance of $500 million in senior notes in March 2014, I believe Kinross has those choices.

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