The Kupol project is based on highgrade gold and silver veins that remain open along strike. Mining is by both openpit and underground methods.

Kinross is 75% owner and operator of the project. The Chukotka government holds the remaining 25%. Kinross gained its interest in February 2007 through its acquisition of Bema Gold.

Kinross’s share of Kupol production for 2008 is expected to be in the range of 365,000 to 390,000 gold equivalent oz. Over the life of the project, its share of production will average 413,000 gold equivalent oz/y. Average cost of sales per gold equivalent oz is expected to be between $235 and $245/oz for 2008; however, by year-end, the project is expected to have lowered its cost of sales to $210-$220/oz.

Capital expenditures to develop the Kupol project were budgeted at $705 million. About $10 million is being added to expenditures during 2008 as a result of Kinross’s decision to buy the Kupol fuel transport fleet, as opposed to subcontracting for those services as was previously planned.

The Kupol mineralization comprises high-grade gold-silver veins. Veins vary between segments of single vein and segments with multiple, sub-parallel, or branching veins. Mineralization is concentrated in distinct shoots separated by areas of barren vein.

The Kupol open-pit, which began producing in 2007, will deliver 1.42 million mt to the mill and stockpile over a mine life of four years at an average grade of 20.4 g/mt gold and 193 g/mt silver, or 17% of the total project. The underground mine, which also began producing in 2007, will deliver 6.8 million mt over a mine life of approximately 10 years at a grade of 16.1 g/mt gold and 205 g/mt silver. Mining takes place over a distance of approximately 2.5 km from north to south. The Kupol deposit is not fully explored, so additions to mine life and mineral reserves are possibly based on further exploration and evaluations. Current reserves stand at 3.3 million oz of gold and 39.6 million oz of silver.

The Kupol mill is a conventional gold/silver cyanidation plant that incorporates a CCD thickener washing circuit and Merrill-Crowe zinc precipitation because of the high silver ore grade. Cyanide destruction is being accomplished with calcium hypochlorite.

Start-up of the Kupol mill occurred at about the same time as a new Russian law governing foreign investment in 42 strategic industrial sectors came into effect. The law covers natural resources but also a wide range of other industries, including arms production, the media, aerospace and fisheries. Criteria for “strategic” natural resources include gold deposits having reserves of more than 50 mt and copper deposits having reserves of more than 500,000 mt. The new law does not affect the Kupol project, nor does it introduce direct bans to foreign investment in the strategic sectors. It does require approval by a special governmental commission for foreign investment in “strategic” properties.

Following release of Kinross’s first-quarter 2008 results and announcement of the milling start at Kupol, Kinross President and CEO Tye Burt acknowledged that future foreign investment in large gold projects in Russia will almost certainly require a Russian partner and that Kinross has “lots of irons in the fire” on that front, although the company had nothing to announce at that time.