Kinross reported in its 2011 results release and conference call in late January 2012 it had reopened negotiations with the government of Ecuador and was seeking an enhanced economic package for developing its Fruta del Norte project in Zamora, Ecuador, while continuing with feasibility work at the project. The company said it would proceed with the project only when it is satisfied with the terms of the final exploitation and investment protection agreements. The timing of the Fruta del Norte feasibility study will depend on the successful conclusion of these negotiations.

Kinross also advised the government it will be exploring options to lower future capital commitments to the project, including project financing, potential strategic partnerships, and lower-cost processing alternatives. Permitting and development work will continue at Fruta del Norte during 2012, including construction of the site access road, upgrading of the existing camp, advancing work on the exploration decline, and exploration drilling.

Kinross and the government of Ecuador reached a non-binding agreement in principle in early December 2011 regarding key fiscal and legal parameters for the exploitation of Fruta del Norte. The agreement included an obligation to maintain the government’s share of project economic benefits at 52%, including a royalty, corporate income tax, the state portion of a profit-sharing contribution, and a windfall profits tax. Included would be an advance royalty payment of $65 million to be credited against future royalty obligations. The windfall profits tax would be 70% on income above an agreed base gold price.

A participant in Kinross’ year-end conference call asked if Kinross was seeking to whittle down the 52% tax burden of the December agreement. Kinross President and CEO Tye Burt responded that while the negotiations were confidential, the company was hoping to find some ways to mitigate the impact of the windfall profits tax and of the other taxes and royalties.

At year-end 2011, the Fruta del Norte project had proven and probable reserves totaling 25.44 million mt, grading 8.21 g/mt gold and 11 g/mt silver and containing 6.7 million oz of gold and 9 million oz of silver.