EX-99.1 2 ex99-1.htm EXHIBIT 99.1

ex99-1.htm

Exhibit 99.1

BUSINESS ACQUISITION REPORT

Item 1.	Identity of Company
1.1	Name and Address of Company
		Kinross Gold Corporation (“Kinross”) 25 York Street, 17th Floor Toronto, ON M5J 2V5
1.2	Executive Officer
		The name of the executive officer of Kinross who is knowledgeable about the significant acquisition and this Business Acquisition Report is:
		Geoff Gold, Executive Vice President and Chief Legal Officer Telephone: (416) 365-5123
Item 2.	Details of Acquisition
2.1	Nature of Business Acquired
		On September 17, 2010, Kinross acquired all of the issued and outstanding shares of Red Back Mining Inc. (“Red Back”) pursuant to a plan of arrangement in accordance with the s. 192 of the Canada Business Corporations Act (the “Arrangement”).
		Red Back is a Canadian corporation with a portfolio of gold properties located in Africa. Red Back’s two key operations are the Chirano Gold Mine in Ghana and the Tasiast Gold Mine in Mauritania.
		Further information regarding the Transaction may be found in the management information circular prepared by Kinross dated August 16, 2010, as supplemented by a supplement dated September 3, 2010, in connection with the special meeting of Kinross shareholders held on September 15, 2010 (the “Circular”). The Circular is available under Kinross’s SEDAR profile at www.sedar.com.
2.2	Date of Acquisition
		September 17, 2010.
2.3	Consideration
		Pursuant to the Arrangement, Kinross issued the former shareholders of Red Back 1.778 Kinross common shares and 0.11 of a Kinross common share purchase warrant (each whole warrant, a “Warrant”) for each Red Back common share. Each Warrant is exerciseable for a period of four years following the completion of the Arrangement at an exercise price of US$21.30 per Kinross common share.

		Each Red Back stock option (each, a “Red Back Option”), which previously gave the holder the right to acquire one common share of Red Back on exercise thereof which had not been duly exercised prior to the effective date of the Arrangement, was exchanged for a fully vested option (each, a “Replacement Option”) to purchase from Kinross the number of Kinross common shares (rounded down to the nearest whole share) equal to: (i) the Option Exchange Ratio (being 1.81) multiplied by (ii) the number of Red Back common shares subject to such Red Back Option immediately prior to the effective date of the Arrangement. Such Replacement Option provides for an exercise price per Kinross Share (rounded up to the nearest whole cent) equal to: (x) the exercise price per Red Back common share otherwise purchasable pursuant to such Red Back Option; divided by (y) the Option Exchange Ratio (being 1.81).
2.4	Effect on Financial Position
		Kinross intends to undertake immediately an extensive development program to expand the Tasiast operation. Kinross currently anticipates completing this expansion program within approximately 36 months, with a view to commencing operations at a new 60,000 tonne per day mill in the fourth quarter of 2013. For further information, please see Kinross’ press releases issued on September 1, 2010 and September 7, 2010.
2.5	Prior Valuations
		None.
2.6	Parties to Transaction
		The transaction was not with an informed person, associate or affiliate of Kinross.
2.7	Date of Report
		November 29, 2010.
Item 3.	Financial Statements
		Attached to this Business Acquisition Report as Schedule A, Schedule B, Schedule C and Schedule D, respectively are:
		(a) the consent of PricewaterhouseCoopers LLP to the incorporation of their audit report on the audited consolidated financial statements of Red Back for the year ended December 31, 2009;
		(b) the audited consolidated financial statements of Red Back for the year ended December 31, 2009, including consolidated balance sheets as at December 31, 2009 and December 31, 2008 and the consolidated statements of income and retained earnings and deficit, cash flows and comprehensive income for the years then ended, together with the notes thereto and the auditors’ reports thereon;

(c) the unaudited interim financial statements of Red Back for the three and six month period ended June 30, 2010, including consolidated balance sheets as at June 30, 2010 and June 30, 2009 and consolidated statements of income and retained earnings and deficit, cash flows and comprehensive income for the three and six months ended June 30, 2010 and June 30, 2009, together with the notes thereto; and

(d) the unaudited pro forma condensed consolidated financial statements of Kinross consisting of the consolidated statements of operations for the six months ended June 30, 2010 and for the year ended December 31, 2009, together with the notes thereto.

SCHEDULE A

AUDITOR’S CONSENT

To Kinross Gold Corporation:

We have read the business acquisition report of Kinross Gold Corporation (the “Company”) dated November 29, 2010 relating to the acquisition of Red Back Mining Inc. (“Red Back”).  We have complied with Canadian generally accepted standards for an auditor’s involvement with  offering documents.

We consent to the use in the above-mentioned business acquisition report of our report to the shareholders of Red Back on the consolidated balance sheets of Red Back as at December 31, 2009 and 2008 and the consolidated statements of income and retained earnings (deficit), cash flows, and comprehensive income (loss) for the years then ended. Our report is dated February 25, 2010.

(Signed) PricewaterhouseCoopers LLP

Chartered Accountants

Vancouver, British Columbia

November 29, 2010

SCHEDULE B

AUDITED CONSOLIDATED FINANCIAL STATEMENTS OF RED BACK

FOR THE YEAR ENDED DECEMBER 31, 2009

(See attached)

MANAGEMENT’S RESPONSIBILITY FOR FINANCIAL REPORTING

The consolidated financial statements have been prepared by and are the responsibility of the management of the Company.

The consolidated financial statements have been prepared in accordance with accounting principles generally accepted in Canada, using management’s best estimates and judgments based on currently available information.

The Company maintains an appropriate system of internal controls to provide reasonable assurance that financial information is accurate and reliable and that the Company’s assets are appropriately accounted for and adequately safeguarded.

The Board of Directors carries out its responsibility for the consolidated financial statements principally through its Audit Committee, comprised of independent directors. The Audit Committee reviews the Company’s annual consolidated financial statements and recommends their approval to the Board of Directors. The Company’s auditors have full access to the Audit Committee, with and without management being present.

The consolidated financial statements have been audited by PricewaterhouseCoopers LLP, Chartered Accountants. Their report outlines the scope of their examination and opinion on the consolidated financial statements.

“Richard Clark”		“Alessandro Bitelli”
Richard Clark		Alessandro Bitelli
President & Chief Executive Officer		Chief Financial Officer
Vancouver, British Columbia February 25, 2010

PricewaterhouseCoopers LLP

Chartered Accountants

PricewaterhouseCoopers Place

250 Howe Street, Suite 700

Vancouver, British Columbia

Canada V6C 3S7

Telephone +1 604 806 7000

Facsimile +1 604 806 7806

Auditors’ Report

To the Shareholders of

Red Back Mining Inc.

We have audited the consolidated balance sheets of Red Back Mining Inc. as at December 31, 2009 and December 31, 2008 and the consolidated statements of income and retained earnings and deficit, cash flows, and comprehensive income for the years then ended. These financial statements are the responsibility of the company’s management. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with Canadian generally accepted auditing standards. Those standards require that we plan and perform an audit to obtain reasonable assurance whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation.

In our opinion, these consolidated financial statements present fairly, in all material respects, the financial position of the company as at December 31, 2009 and December 31, 2008 and the results of its operations and its cash flows for the years then ended in accordance with Canadian generally accepted accounting principles.

(signed) PricewaterhouseCoopers LLP

Chartered Accountants

Vancouver, British Columbia

February 25, 2010

“PricewaterhouseCoopers” refers to PricewaterhouseCoopers LLP, an Ontario limited liability partnership, or, as the context requires, the PricewaterhouseCoopers global network or other member firms of the network, each of which is a separate legal entity.

RED BACK MINING INC.

CONSOLIDATED BALANCE SHEETS

(in Thousands of United States Dollars)

		December 31, 2009				December 31, 2008
ASSETS
Current assets
Cash and cash equivalents		$	150,471			$	22,205
Accounts receivable			32,795				15,179
Marketable securities (Note 4)			-				28,966
Inventories (Note 5)			76,779				45,132
Prepaid expenses			2,298				397
			262,343				111,879
Deferred charges			490				-
Property, plant and equipment (Note 6)			269,246				208,425
Mineral properties and related expenditures (Note 7)			429,052				381,398
		$	961,131			$	701,702
LIABILITIES
Current liabilities
Accounts payable and accrued liabilities		$	43,256			$	36,837
Bank loan (Note 8)			-				28,000
Taxes payable			929				-
			44,185				64,837
Non current liabilities
Asset retirement obligations (Note 9)			11,492				9,768
Future income tax liability (Note 13)			55,000				49,117
Other liabilities			2,073				-
			68,565				58,885
Minority interest			1,008				-
Shareholders’ equity
Share capital (Note 10)			758,243				607,914
Contributed surplus (Note 11)			7,201				10,506
Accumulated other comprehensive income			15,099				1,892
Retained earnings (deficit)			66,830				(42,332	)
			847,373				577,980
		$	961,131			$	701,702

Contingency and commitments (Notes 13 and 15)
Approved by the Board:
“Richard P. Clark”		“Lukas H. Lundin”
Director		Director

See accompanying notes to consolidated financial statements.

RED BACK MINING INC.

CONSOLIDATED STATEMENTS OF INCOME AND RETAINED EARNINGS (DEFICIT)

(in Thousands of United States Dollars)

		Year Ended				Year Ended
		December 31, 2009				December, 31 2008
Gold revenue		$	318,389			$	223,660
Costs and expenses
Operating			125,070				110,537
Depreciation and amortization			57,606				43,972
Accretion			391				503
Royalties			17,552				6,710
Profit from mining operations			117,770				61,938
Depreciation			18				20
General and administrative			11,314				7,247
Interest expense and bank charges			642				673
Stock based compensation			8,998				3,999
Write-off of exploration costs			2,110				849
Interest income			(1,248	)			(877	)
			21,834				11,911
Income before the undernoted items			95,936				50,027
Foreign exchange gain			6,190				5,659
Gain on sale of marketable securities			3,020				1,708
Other income			13,174				-
Income before income taxes			118,320				57,394
Current income tax expense			(1,621	)			-
Future income tax recovery (expense)			(6,529	)			4,507
			(8,150	)			4,507
Net income before minority interest			110,170				61,901
Minority interest			(1,008	)			-
Net income			109,162				61,901
Deficit, beginning of the year			(42,332	)			(104,233	)
Retained earnings (deficit), end of the year		$	66,830			$	(42,332	)
Income per common share – basic		$	0.48			$	0.33
Weighted average number of shares outstanding - basic			227,412,339				189,386,214
Income per common share – diluted		$	0.48			$	0.32
Weighted average number of shares outstanding - diluted			228,976,372				190,702,308

See accompanying notes to consolidated financial statements.

RED BACK MINING INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(in Thousands of United States Dollars)

		Year Ended				Year Ended
		December 31, 2009				December 31, 2008
Cash flows from (used in) operating activities
Net income		$	109,162			$	61,901
Items not affecting cash
Amortization and depreciation			57,624				43,992
Accretion			391				503
Deferred charges			210				-
Foreign exchange gain			(6,190	)			(5,659	)
Future income taxes			6,529				(4,507	)
Gain on sale of marketable securities			(3,020	)			(1,708	)
Minority interest			1,008				-
Stock based compensation			6,589				3,999
Write off of exploration costs			2,110				849
			174,413				99,370
Net changes in non-cash working capital items
Accounts receivable and prepaid expenses			(19,517	)			(4,861	)
Inventories			(31,647	)			(16,693	)
Accounts payable and accrued liabilities			8,434				8,272
			131,683				86,088
Cash flows from (used in) investing activities
Mineral properties and related expenditures			(85,975	)			(77,268	)
Purchase of property, plant and equipment			(83,958	)			(99,250	)
Purchase of marketable securities			-				(31,648	)
Proceeds from the sale of marketable securities			26,297				5,775
			(143,636	)			(202,391	)
Cash flows from (used in) financing activities
Common shares issued, net of cash issue costs			144,478				49,355
Debt issue (repayments)			(28,000	)			28,000
Deferred charges			(700	)			-
			115,778				77,355
Effect of exchange rate changes on translation of cash denominated in a currency other than the US dollar			24,441				(1,677	)
Increase (decrease) in cash and cash equivalents			128,266				(40,625	)
Cash and cash equivalents, beginning of the year			22,205				62,830
Cash and cash equivalents, end of the year		$	150,471			$	22,205

See accompanying notes to consolidated financial statements.

RED BACK MINING INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(in Thousands of United States Dollars)

		Year Ended				Year Ended
		December 31, 2009				December 31, 2008
Net income		$	109,162			$	61,901
Gain on marketable securities reclassified to net income on realization			(5,044	)			-
Foreign exchange gain on net assets denominated in other than US dollars reclassified to net income on realization			(6,190	)			(5,659	)
Unrealized gain on marketable securities available for sale, net of applicable future income taxes			-				5,044
Unrealized foreign exchange gain (loss) on net assets denominated in other than the US dollar			24,441				(6,069	)
Total other comprehensive income			13,207				(6,684	)
Comprehensive income		$	122,369			$	55,217

See accompanying notes to consolidated financial statements.

RED BACK MINING INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2009 AND 2008

(Tables in Thousands of United States Dollars)

1.	Nature of Operations and Basis of Presentation
	Red Back Mining Inc. (“Red Back” or the “Company”) is a mineral resource corporation engaged in operating, exploring, acquiring and developing mineral properties. The Company currently owns two gold mines in West Africa. In Ghana, it holds a 100% interest in the Chirano Gold Mine (“Chirano”). The Government of Ghana has the right to acquire a 10% ownership of Chirano Gold Mines Limited, at no cost. In Mauritania, the Company holds a 100% interest in the Tasiast Gold Mine (“Tasiast”). The Company also holds various other exploration properties in Ghana, Mauritania and Côte d’Ivoire.
2.	Changes in Accounting Policies
	Effective January 1, 2009, the Company adopted the Canadian Institute of Chartered Accountants (“CICA”) standard issued under Section 3064 of the Handbook, “Goodwill and Intangible Assets,” which replaces Section 3062, “Goodwill and Other Intangible Assets.” This new standard provides guidance on the recognition, measurement, presentation and disclosure of goodwill and intangible assets. Concurrent with the adoption of this standard, CICA Emerging Issues Committee Abstract 27, “Revenues and Expenditures in the Pre-operating Period” (“EIC-27”), was withdrawn. Adoption of this standard did not have a significant effect on the Company’s financial statements.
3.	Significant Accounting Policies
	(a)	Basis of Consolidation
		These consolidated financial statements include the accounts of the Company and its subsidiaries. The Company’s material subsidiaries are Red Back Mining Ghana Limited and Chirano Gold Mines Limited (100% owned Ghanaian companies), and Tasiast Mauritanie Limited SA (100% owned Mauritanian company). All inter-company balances and transactions have been eliminated upon consolidation.
		As detailed in Note 7, the Company currently holds 100% of Chirano Gold Mines Limited (“CGML”), which owns the Chirano Gold Mine. Upon the Government of Ghana exercising its right to back-in to a 10% ownership of CGML, at no cost, the Company will hold a 90% interest in CGML with the Government of Ghana holding 10%. Accordingly, the Company recognizes a minority interest of 10% on the retained earnings of CGML.
	(b)	Foreign Currencies
		The US dollar is the reporting currency of the Company.
		The assets and liabilities of self-sustaining operations which are denominated in a currency other than the US dollar are translated at year-end exchange rates, and revenues and expenses are translated at the average exchange rates. Differences arising from these foreign currency translations are reported as other comprehensive income.

	(c)	Use of Estimates
		The preparation of financial statements in conformity with Canadian generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the dates of the financial statements and the reported amounts of revenues and expenses during the reported periods. Actual results could differ from those estimates.
		Significant areas where management’s judgment is applied include: estimated lives of mining assets, asset retirement obligations, future income tax balances and rates, stock based compensation valuation assumptions and asset impairment considerations.
	(d)	Financial Instruments
		The Company’s financial instruments consist of cash and cash equivalents, accounts receivable, marketable securities, accounts payable and accrued liabilities, and bank loans. Cash and cash equivalents and marketable securities are classified as available for sale financial assets, recognized at fair value with any unrealized gain or loss recorded in other comprehensive income. The fair value of all other financial instruments approximates their carrying values, due to their short-term maturity or capacity of prompt liquidation.
		CICA Handbook section 3862 establishes a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair values. The Company’s financial instruments as at December 31, 2009 classified as “Level One - Quoted prices in active markets” are cash and cash equivalents. Accounts receivable, accounts payables and accrued liabilities are classified as “Level Two - Inputs other than quoted prices that are observable for the assets and liabilities either directly or indirectly”.
		Additional disclosure required under Section 3862 can be found in the Management Discussion and Analysis for the year ended December 31, 2009, filed with securities regulators together with the these financial statements, under the section titled “Financial Instruments and Related Risks”.
	(e)	Cash and Cash Equivalents
		Cash and cash equivalents may include cash on hand, term deposits and short-term highly liquid investments which are readily convertible to known amounts of cash within three months of purchase and which, in the opinion of management, are subject to an insignificant risk of changes in value.
	(f)	Inventories
		Inventories consist of finished gold inventory, stockpile ore, gold-in-circuit inventories, and materials and supplies. Inventories are valued at the lower of average production cost and net realizable value.
		For stockpile ore and gold-in-circuit inventories, net realizable value is determined taking into account a reasonable allowance for further processing and sales costs. Net realizable value for materials and supplies inventories is determined based on current replacement cost.
		When the circumstances that previously caused inventories to be written down below cost no longer exist or when there is clear evidence of an increase in net realizable value because of changed economic circumstances, the amount of the write-down is reversed.

	(g)	Mineral Properties and Related Expenditures
		Direct mineral exploration, evaluation and development costs until such time as an economic ore body is defined or the project is abandoned and the estimated fair value of any related asset retirement obligations (Note 3(k)) are capitalized on an individual project basis. Costs for a producing project, net of residual or salvage values, are amortized on a unit-of-production method based on the estimated life of the ore reserves, while costs for properties abandoned are written off.
		The recoverability of the amounts capitalized for undeveloped mineral properties is dependent upon the determination of economically recoverable ore reserves, confirmation of the Company’s interest in the underlying mineral properties, the ability to obtain the necessary financing to complete their development and future profitable production or proceeds from the disposition thereof.
		Title to mineral properties involves inherent risks due to the difficulties of determining the validity of certain claims as well as the potential for problems arising from the frequently unreliable conveyance history characteristic of many mineral properties. The Company has investigated title to all of its mineral properties and, to the best of its knowledge, all of its properties are in good standing.
	(h)	Property, Plant and Equipment
		Property, plant and equipment are recorded at cost. Repairs and maintenance expenditures are charged to operations as incurred. Major improvements and replacements, which extend the useful life of an asset, are capitalized. Mine property, plant and machinery, net of residual or salvage value, are amortized on a straight line basis over the life of the mines. Other plant and equipment is depreciated on a straight-line basis, net of residual value, over the estimated useful life of the asset.
	(i)	Long-lived Assets Impairment Assessments
		The Company reviews and evaluates the recoverability of mineral properties and related expenditures, property, plant and equipment at the end of each reporting period and when events and circumstances indicate that an impairment event may have occurred. This evaluation is based on forecasted future net cash flows, on an undiscounted basis, from each mine and development property using estimated recoverable ounces of gold (considering current proven and probable reserves and the portion of mineralization which is expected to become reserves), estimated future gold prices (considering historical and current prices, price trends and related factors), and estimated operating, capital and reclamation costs. An impairment charge is recorded if the undiscounted future net cash flows are less than the carrying amount. Reductions in the carrying value of property, plant and equipment, with a corresponding charge to earnings, are recorded to the extent that the estimated future net cash flows on a discounted basis are less than the carrying value.
		Estimates of future cash flows are subject to risks and uncertainties and it is reasonably possible that changes in future conditions could occur which may affect the recoverability of property, plant and equipment.

	(j)	Stripping Costs
		Stripping costs in the pre-production phase are capitalized while, after commencement of production, they are accounted for as variable production costs to be included in the costs of inventory produced, unless the stripping activity can be shown to be a betterment of the mineral property, in which case stripping costs are capitalized. Betterment occurs when stripping activity increases future output of the mine by providing access to additional sources of reserves. Capitalized stripping costs are amortized on a units-of-production basis over the proven and probable reserves to which they relate.
	(k)	Asset Retirement Obligations
		The Company recognizes a liability for material legal or contractual obligations relating to the retirement of property, plant and equipment and obligations arising from the acquisition, construction, development, or normal operation of those assets. Such asset retirement costs are recognized at fair value, when a reasonable estimate of fair value can be made, in the period in which the liability is incurred. A corresponding increase to the carrying amount of the related asset, where one is identifiable, is recorded and amortized over the life of the asset. Where a related asset is not easily identifiable with a liability, the change in fair value over the course of the year is expensed. The amount of the liability is subject to remeasurement at each reporting period. It is possible that the Company’s estimate of its ultimate reclamation liabilities could change as a result of changes in regulations, the extent of environmental remediation required or completed, the means of reclamation or changes in cost estimates.
	(l)	Future Income Taxes
		Future income tax assets and liabilities are calculated using the liability method of accounting for all temporary differences between the carrying amounts of assets and liabilities and their corresponding tax bases. Future income tax assets attributable to temporary differences and unused tax losses are recognized only to the extent that it is more likely than not that the asset will be realized. Future income tax assets and liabilities are measured using the enacted or substantially enacted rates and laws that are expected to apply when these assets and liabilities will be either realized or settled.
	(m)	Share Capital
		Share capital issued for non-monetary consideration is recorded at an amount based on fair value reduced by an estimate of transaction costs normally incurred when issuing shares for cash.
	(n)	Revenue Recognition
		Revenue is recorded when there is persuasive evidence that an arrangement exists, the selling price is fixed and determinable, collectability is reasonably assured and when title and the risks and rewards of ownership pass to the buyer. Adjustments to these amounts are made after final prices, weights and assays are established.
	(o)	Stock-Based Compensation
		The fair value of stock appreciation rights (“SAR’s”) is calculated using the intrinsic method and reflects the net increase in the price of Red Back common shares from the time of grant to the time of exercise of the SAR’s. Changes in the intrinsic value are recorded as an expense/recovery on a straight-line basis over their graded vesting periods and the credit is recorded as a liability as the SAR’s vest.

		The fair value of deferred share units (“DSU’s”) is calculated using the intrinsic method and is based on the value of Red Back common shares from the time of grant to the time of exercise of the DSU’s. Changes in the intrinsic value are recorded as an expense/recovery on a straight-line basis over their graded vesting periods and the credit is recorded as a liability as the DSU’s vest.
		The fair value of stock option grants is calculated using the Black-Scholes model and takes into account a number of variables, including the exercise price, the expected dividends on the stock, the Company’s share price and its expected volatility, the expected forfeiture rates and expected life of the options, and the risk-free interest rate over the options expected life. It is recorded as an expense on a straight-line basis over their graded vesting periods and the credit is recorded to contributed surplus. The fair value is subsequently transferred to share capital on exercise of the related option. Cash consideration received when options are exercised is credited to capital stock. The volatility assumptions take into consideration both historical and implied volatility of the Company’s share price. The forfeiture rate is estimated based on historical and expected future forfeitures rates, adjusted when the actual forfeiture rate differs from the expected rate. The expected life of the options takes into consideration historical data regarding the timing of exercise by option holders. The risk-free rate is based on the yields of government of Canada bonds with a remaining life equivalent to the expected life of the options.
	(p)	Earnings Per Share
		Earnings per share are calculated by dividing net income for the year by the weighted average number of common shares outstanding during the year. Diluted earnings per share are calculated using the treasury stock method which, for purposes of determining the weighted average number of shares outstanding, assumes that the proceeds to be received on the exercise of the stock options and warrants are applied to repurchase common shares at the average market price for the year. When a loss is incurred, basic and diluted loss per share is the same because the inclusion of common share equivalents would be anti-dilutive.
	(q)	Certain of the 2008 balances have been reclassified to conform to this year’s presentation.
4.	Marketable Securities
	Marketable securities consisting of 62,090,407 shares in Mineral Deposits Limited were sold during the year realizing a $3.0 million gain on disposition. The Company did not hold marketable securities at December 31, 2009.
5.	Inventories

		December 31,
		2009				2008
Stockpile ore		$	28,580			$	17,190
Gold in circuit			3,442				2,840
Gold in safe			4,718				2,429
Materials and supplies			40,039				22,673
		$	76,779			$	45,132

6. Property, Plant and Equipment

		December 31, 2009												December 31, 2008
		Cost				Accumulated Depreciation				Net Book Value				Cost				Accumulated Depreciation				Net Book Value
Plant and equipment		$	287,540			$	39,706			$	247,834			$	141,218			$	21,035			$	120,183
Motor vehicles			4,284				2,406				1,878				2,819				1,801				1,018
Buildings			11,475				1,921				9,554				7,882				1,116				6,766
Construction in progress			9,980				-				9,980				80,458				-				80,458
		$	313,279			$	44,033			$	269,246			$	232,377			$	23,952			$	208,425

7. Mineral Properties and Related Expenditures

		Chirano				Tasiast				Other Projects				Total
Balance, December 31, 2007		$	79,563			$	248,668			$	6,670			$	334,901
Exploration and evaluation costs			12,338				13,139				285				25,762
Development expenditure			42,442				8,978				-				51,420
Change in estimated asset retirement obligations			-				207				-				207
Amortization			(8,327	)			(21,716	)			-				(30,043	)
Write-off of deferred exploration costs			-				-				(849	)			(849	)
Balance, December 31, 2008		$	126,016			$	249,276			$	6,106			$	381,398
Exploration and evaluation costs			6,302				15,868				2,206				24,376
Development expenditure			49,207				12,392				-				61,598
Change in estimated asset retirement obligations			-				1,333				-				1,333
Amortization			(13,765	)			(23,779	)			-				(37,544	)
Write-off of deferred exploration costs			-				-				(2,110	)			(2,110	)
Balance, December 31, 2009		$	167,760			$	255,090			$	6,202			$	429,052

Included in the above balance for Chirano are $32.1 million (December 31, 2008: $7.9 million) of stripping costs incurred subsequent to commencement of production. Amortization of these costs amounted to $2.3 million (2008: $nil).

Chirano Gold Mine

The Chirano Gold Mine comprises one mining lease and one prospecting license held through the Company’s 100% subsidiary, CGML. Upon the Government of Ghana exercising its right to back-in to a 10% ownership of CGML, at no cost, the Company will hold a 90% interest in CGML with the Government of Ghana holding 10%.

Tasiast Gold Mine

The Tasiast Gold Mine comprises one mining lease held through the Company’s 100% owned subsidiary Tasiast Mauritanie Limited SA (“TMLSA”).

	Other Exploration Projects
	The Company owns interests in a number of other exploration properties in Ghana, Mauritania and Côte d’Ivoire. These interests are represented by various prospecting licenses and option agreements. During the year, the Company wrote off $2.1 million (2008: $849,000) of previously deferred exploration costs relating to Ghanaian properties whose interest was relinquished or no longer deemed prospective.
8.	Bank Loan
	Early in the year, the Company retired a bank loan collateralized by marketable securities and guarantees from its two operating subsidiaries.
	During the year, the Company finalized a $30 million revolving facility, collateralized by a pledge of CGML and TMLSA shares, an assignment of advances to subsidiaries, and guarantees from CGML and TMLSA. Interest on the outstanding amount of this facility is charged at US LIBOR plus 3.75% per annum. Commitment fees vary between 1.0 and 1.25% per annum depending on the extent of utilization of the line. No funds were drawn from this facility during the year.
9.	Asset Retirement Obligations
	Federal, state and local laws and regulations concerning environmental protection affect the Company’s operations. Under current regulations, the Company is required to meet performance standards to minimize environmental impact from operations and to perform site restoration and other closure activities. The Company’s provisions for future site closure and reclamation costs are based on known requirements at the present time. It is not currently possible to estimate the impact on operating results, if any, of future legislative or regulatory developments.

	Year Ended December 31, 2009												Year Ended
	Chirano				Tasiast				Total				December 31, 2008
Balance, beginning of year		$	7,223			$	2,545			$	9,768			$	9,144
Change in estimate			-				1,333				1,333				207
Incurred in the year			-				-				-				(86	)
Accretion expense			289				102				391				503
Balance, end of year		$	7,512			$	3,980			$	11,492			$	9,768

The Company has calculated the fair value of the asset retirement obligation using a discount rate of 4.0%.

The estimated total future undiscounted cash flows to settle the asset retirement obligations are $10.0 and $5.5 million (December 31, 2008: $11.4 and $4.1 million) for Chirano and Tasiast, respectively, incurred over approximately eight to thirteen years.

10.	Share Capital
	(a)	The Company has an unlimited number of without par value common shares authorized for issuance.

Shares Issued and Outstanding:		Number of Shares								Amount
		Year ended December 31,
		2009				2008				2009				2008
Balance, beginning of year			206,095,970				187,814,970			$	607,914			$	556,920
Issued by short-form prospectus (i)			22,000,000				17,150,000				126,966				45,804
Issued on exercise of options			3,730,664				1,131,000				17,512				3,551
Fair value of options exercised (ii)			-				-				5,851				1,639
Balance, end of year			231,826,634				206,095,970			$	758,243			$	607,914

		(i)	On February 12, 2009, the Company raised gross proceeds of $132.5 million (CAD $165 million) by issuing 22.0 million common shares at a price of CAD $7.50 per share under a short form prospectus financing.
			On December 11, 2008, the Company raised gross proceeds of $48.6 million (CAD $60 million) by issuing 17,150,000 common shares at a price of CAD $3.50 per share under a short form prospectus financing.
		(ii)	Upon exercise of options the pro-rata carrying value is recognized in share capital and the contributed surplus is reduced accordingly.
		Share issue costs under the short form prospectus financing completed during the year ended December 31, 2009 totaled $5.6 million (2008: $3.4 million).
	(b)	As at December 31, 2009, the Company had only 1,849 common shares available under its existing stock option plan (the “Plan”) to grant new incentive stock options to directors, officers, employees and consultants of the Company. Accordingly, in the fourth quarter, the Company established a second stock option plan (the “New Plan”) under which the Company has an additional 8 million common shares available to grant stock options to directors, officers, employees and consultants. The New Plan is subject to approval by shareholders. The term of any option granted under both plans is fixed by the Board of Directors and may not exceed 10 years from the date of grant. No optionee shall be entitled to a grant of more than 10% of the Company’s outstanding issued shares. The vesting of options is at the discretion of the Board.
		A summary of outstanding incentive stock options under both plans as at December 31, 2009 is as follows:

			Number of outstanding options				Weighted average exercise price (CAD $)			Weighted average remaining contractual life		Exercisable options
	Range of exercise prices											Number of outstanding options				Weighted average exercise price (CAD $)
	$5.56 - $6.25			1,830,000				6.08		0.8 year			1,830,000				6.08
	$6.26 - $10.09			2,278,336				6.79		2.1 years			1,531,669				6.69
	$10.09 - $13.29			1,625,000				12.90		3.7 years			50,000				10.10
				5,733,336				8.30		1.9 years			3,411,669				6.41

Changes in issued and outstanding options under the both plans were as follows:

			Year ended December 31, 2009								Year ended December 31, 2008
			Options outstanding				Weighted average exercise price (CAD $)				Options outstanding				Weighted average exercise price (CAD $)
	Balance, beginning of year			7,379,000				5.84				7,595,000				5.34
	Cancelled (i)			(1,025,000	)			6.81				-				7.03
	Exercised			(3,730,664	)			5.30				(1,131,000	)			3.42
	Forfeited			(110,000	)			6.08				(425,000	)			7.09
	Granted (i), (ii) and (iii)			3,220,000				9.92				1,340,000				7.03
	Balance, end of year			5,733,336				8.30				7,379,000				5.84

		(i)	These options were granted subject to shareholders’ approval under the Plan in the early part of 2009 and were subsequently withdrawn.
		(ii)	It includes 1,175,000 stock options granted conditionally under the New Plan at an exercise price of CAD $13.29. The granting of these options is subject to shareholders’ approval.
		(iii)	The weighted average fair value of the options granted during 2009 was $2.66 (2008: $2.32). The fair value related to the options described under (ii) will be measured as at the shareholders’ approval date.
		The Company uses the Black-Scholes option pricing model in calculating the fair value of stock options. In 2009, the key assumptions used were a risk-free rate of between 0.5% and 2.2% (2008: 1.8% to 3.0%), an expected volatility of between 47% and 80% (2008: 36% to 53%), an expected option life of between one and four years, no dividend payments, and a forfeiture rate of between zero and 12%, adjusted for actual forfeitures if different.
		At December 31, 2009, there was $1.8 million (December 31, 2008: $1.7 million) of unearned future compensation costs relating to unvested stock options expected to be recognized over the course of the next three years.
	(c)	In the fourth quarter of 2009, the Company established a SAR’s Plan under which the Company can grant SAR’s up to a number equal to 2% of its issued and outstanding common shares to officers, employees and consultants or other eligible participants. Under the SAR’s Plan, SAR recipients are entitled to receive the cash value equal to the increase in the price of Red Back common shares between the time of grant and the time of the exercise of the SAR’s. The term and vesting conditions of any SAR granted under the plan is fixed by the Board of Directors. No SAR recipient is entitled to a grant of SAR’s exceeding 1% of the Company’s outstanding issued shares.

			Year ended December 31, 2009
			Outstanding SAR’s				Fair Value
	Balance, December 31, 2008			-			$	-
	Granted			1,550,000				-
	Change in value			-				1,513,077
	Balance, December 31, 2009			1,550,000			$	1,513,077

		Unearned future compensation costs for unvested SAR’s expected to be recognized over the course of the next two years account for $1.2 million (December 31, 2008: $nil) of the above balance.
	(d)	In the fourth quarter of 2009, the Company established a DSU’s Plan under which the Company can grant DSU’s up to a number equal to 1% of its issued and outstanding common shares to non-executive directors of the Board. Under the DSU’s Plan, DSU recipients are entitled to receive the cash value of Red Back common shares at the time of their retirement. The vesting conditions of any DSU granted under the plan are fixed by the Board of Directors.

				Year ended December 31, 2009
				Outstanding DSU’s		Fair Value
	Balance, December 31, 2008			-		$	-
	Granted			99,000			1,382,297
	Change in value			-			9,371
	Balance, December 31, 2009			99,000		$	1,391,668

(e) In the fourth quarter of 2009, the Company also granted cash-settled share-based awards based on the increase in Red Back’s share price during the period of time in 2009 when no equity-based compensation plan was available to certain officers and employees. The estimated unearned future compensation costs relating to these incentive awards at December 31, 2009 was $4.9 million and is expected to be recognized over the course of the next two years.

11. Contributed Surplus

			Year Ended December 31,
			2009				2008
	Balance, beginning of year		$	10,506			$	8,146
	Fair value of stock-based compensation			2,546				3,999
	Fair value of options exercised			(5,851	)			(1,639	)
	Balance, end of year		$	7,201			$	10,506

12.	Related Party Transactions
	Transactions for the years ended December 31, 2009 and 2008 and year end balances with related parties not disclosed elsewhere in these financial statements are as follows:
	(a)	Paid $0.5 million (2008: $0.5 million) for management services provided by a company related to the President of the Company. At December 31, 2009 and 2008, $nil was due to this company.
	(b)	Paid $0.4 million (2008: $0.5 million) to a company controlled by a director for management services. At December 31, 2009 and 2008, $nil was due to this company.
	(c)	In 2009, received $1.2 million from the sale of a single gold bar to a company controlled by a director at the then prevailing spot market price of gold.

13.	Income Taxes
	The estimation of the Company’s future tax assets and liabilities involves significant judgment around a number of assumptions. Judgment must be used to determine the Company’s future earning potential, and the expected timing of the reversal of future tax assets and liabilities. Further uncertainties are the result of interpretation of tax legislation in a number of jurisdictions which might differ from the ultimate assessment of the tax authorities. These differences may affect the final amount or the timing of the payment of taxes.
	Future income taxes reflect the net effects of temporary differences between the carrying amount of assets and liabilities for financial reporting purposes and the amounts recognized for income tax purposes. The significant components of the Company’s estimated future income tax assets and liabilities are as follows:

			December 31,
			2009				2008
	Future income tax assets:
	Non-capital loss carry-forwards		$	11,102			$	9,112
	Capital assets			13,645				4,961
	Deferred expenditures			15,293				17,143
	Share issuance costs			3,553				2,945
				43,593				34,161
	Valuation allowance			(25,423	)			(25,188	)
				18,170				8,973
	Future income tax liabilities:
	Capital assets			(24,053	)			(8,241	)
	Marketable securities			-				(732	)
	Acquisition of Tasiast			(49,117	)			(49,117	)
			$	(55,000	)		$	(49,117	)

The non-capital loss carry-forwards have expiry dates ranging between 2010 and 2029.

The future income tax liability of $49.1 million relates to the excess of the fair value of Tasiast’s net assets over their tax costs, which has been substantially allocated to mineral properties. As the future amortization of this asset for accounting purposes will exceed the equivalent tax deduction, the Company recorded the future tax liability relating to this difference at time of acquisition in 2007.

As a result of a tax audit during 2009, CGML received a notice of re-assessment of prior years’ income tax returns denying approximately $90 million of past, current and future income tax deductions and imputing additional revenues of approximately $30 million, both related to the tax treatment of hedge contracts entered into in 2005 as part of the original bank project financing required for the construction of the Chirano Gold Mine. CGML is vigorously defending its original tax filing position. The final outcome of this matter is not determinable at this time. Should the reassessment be ultimately upheld, it would result in the recognition of additional future income tax liabilities of approximately $22 million.

Income tax expense differs from the amount that would result from applying the weighted average group statutory tax rates to income before income taxes. These differences are presented in the following table.

			Year Ended December 31,
			2009				2008
	Net income before income taxes		$	117,311			$	57,394
	Tax at the applicable rate of 26.6% (2008: 24.8%)		$	31,163			$	14,234
	Non-taxable income			(19,768	)			(17,657	)
	Unrecognized benefit of current year’s losses			810				1,444
	Benefit of previously unrecognized items			(9,886	)			(8,140	)
	Non-deductible expenses			5,831				5,612
	Income tax expense (recovery)		$	8,150			$	(4,507	)

14. Segmented Information

		Year Ended December 31, 2009
			Ghana				Mauritania				Others				Total
	Gold revenues		$	164,960			$	153,429			$	-			$	318,389
	Operating costs and expenses			(78,008	)			(64,613	)			-				(142,621	)
	Depreciation, amortization and accretion			(20,644	)			(37,354	)			-				(57,998	)
	Profit from mining operations			66,308				51,462				-				117,770
	Other income (costs)			(14,487	)			1,638				4,241				(8,608	)
	Net income (loss)		$	51,821			$	53,100			$	4,241			$	109,162
		Year Ended December 31, 2008
			Ghana				Mauritania				Others				Total
	Gold revenues		$	104,965			$	118,695			$	-			$	223,660
	Operating costs and expenses			(60,653	)			(56,594	)			-				(117,247	)
	Depreciation, amortization and accretion			(13,065	)			(31,410	)			-				(44,475	)
	Profit from mining operations			31,247				30,691				-				61,938
	Other income (costs)			(985	)			3,712				(2,764	)			(37	)
	Net income (loss)		$	30,262			$	34,403			$	(2,764	)		$	61,901
		As at December 31, 2009
			Ghana				Mauritania				Others				Total
	Current assets		$	62,630			$	69,666			$	130,047			$	262,343
	Capital assets, net of depreciation and amortization			274,950				422,403				1,435				698,788
				337,580				492,069				131,482				961,131
	Current liabilities			(21,166	)			(16,115	)			(6,904	)			(44,185	)
	Non-current liabilities			(8,702	)			(4,123	)			(1,748	)			(14,573	)
	Future income tax liabilities			(8,758	)			(46,242	)			-				(55,000	)
			$	298,954			$	425,589			$	122,830			$	847,373

		As at December 31, 2008
			Ghana			Mauritania				Others				Total
	Current assets		$	36,430			$	30,171			$	45,278			$	111,879
	Capital assets, net of
	depreciation and amortization			200,886				388,541				396				589,823
				237,316				418,712				45,674				701,702
	Current liabilities			(18,051	)			(15,812	)			(30,974	)			(64,837	)
	Non-current liabilities			(7,223	)			(2,545	)			-				(9,768	)
	Future income tax liabilities			-				(49,117	)			-				(49,117	)
			$	212,042			$	351,238			$	14,700			$	577,980
		Additions to Property Plant and Equipment
			Ghana			Mauritania				Others				Total
	Year ended December 31, 2009		$	41,499			$	39,403			$	-			$	80,902
	Year ended December 31, 2008		$	37,578			$	64,548			$	-			$	102,126

	The Company operates only in the gold sector.
15.	Commitments
	As at December 31, 2009, the Company had purchase commitments totaling approximately $17.1 million (December 31, 2008: $16.3 million) including $8 million for Tasiast’s 2010 expansion fees.
16.	Management of Capital
	The Company’s objectives in managing its capital resources are to safeguard the entity’s ability to continue as a going concern and, thereby, maximize returns to shareholders in the context of the market. The Company satisfies its capital requirements through careful management of its cash resources and by utilizing bank indebtedness or equity issues, as necessary, based on the prevailing economic conditions of both the industry and the capital markets and the underlying risks characteristics of the related assets.
	Red Back has recently completed capital expansion programs at its two mining operations. The Company has funded these programs from operating cash flow and existing treasury. Management has also finalized a corporate bank debt facility to provide it with additional flexibility in pursuing internally generated growth initiatives, or responding to new opportunities.
	The Company is not currently subject to any externally imposed requirements on its shareholders’ equity and there has been no change with respect to the overall capital risk management strategy during the year ended December 31, 2009.

SCHEDULE C

UNAUDITED INTERIM FINANCIAL STATEMENTS OF RED BACK

FOR THE THREE AND SIX MONTH PERIOD ENDED JUNE 30, 2010

(See attached)

RED BACK MINING INC.

INTERIM CONSOLIDATED BALANCE SHEETS

(in Thousands of United States Dollars, Unaudited)

		June 30,				December 31,
		2010				2009
ASSETS
Current assets
Cash and cash equivalents		$	730,488			$	150,471
Accounts receivable			38,634				32,795
Marketable securities (Note 2)			1,526				-
Inventories (Note 3)			87,546				76,779
Prepaid expenses			5,132				2,298
			863,326				262,343
Deferred charges			307				490
Property, plant and equipment, net (Note 4)			284,877				269,246
Mineral properties and related expenditures (Note 5)			478,306				429,052
		$	1,626,816			$	961,131
LIABILITIES
Current liabilities
Accounts payable and accrued liabilities		$	43,355			$	43,256
Taxes payable			1,073				929
			44,428				44,185
Non current liabilities
Asset retirement obligations (Note 6)			11,722				11,492
Future income tax liability			64,128				55,000
Other liabilities			11,463				2,073
			87,313				68,565
Minority interest			3,549				1,008
Shareholders’ equity
Share capital (Note 7)			1,342,415				758,243
Contributed surplus (Note 8)			19,963				7,201
Accumulated other comprehensive income			7,217				15,099
Retained earnings			121,931				66,830
			1,491,526				847,373
		$	1,626,816			$	961,131

Commitments and contingency (Note 11)

	Approved by the Board:
	“Richard P. Clark”		“Lukas H. Lundin”
	Director		Director

See accompanying notes to interim consolidated financial statements.

RED BACK MINING INC.

INTERIM CONSOLIDATED STATEMENTS OF INCOME AND RETAINED EARNINGS

(in Thousands of United States Dollars, Unaudited)

		Three months ended								Six months ended
		June 30								June 30
		2010				2009				2010				2009
Gold Sales		$	131,047			$	69,353			$	241,043			$	135,211
Costs and expenses
Operating			52,279				28,346				99,142				56,289
Depreciation and amortization			17,599				11,684				31,926				21,769
Accretion			115				134				230				269
Royalties			6,730				2,212				11,841				4,134
Profit from mining operations			54,324				26,977				97,904				52,750
General and administrative			3,162				2,198				5,224				3,487
Interest expense and bank charges			181				96				368				243
Stock based compensation			21,982				(255	)			27,368				1,308
Write-off of exploration costs			-				-				166				-
Interest income			(899	)			(431	)			(1,146	)			(627	)
			24,426				1,608				31,980				4,411
Income before undernoted items			29,898				25,369				65,924				48,339
Gain on sale of securities			-				-				-				3,020
Foreign exchange gain			-				472				2,671				472
			-				472				2,671				3,492
Income before income taxes			29,898				25,841				68,595				51,831
Current income tax expense			1,078				-				1,826				-
Future income tax expense			5,387				1,175				9,128				1,820
			6,465				1,175				10,954				1,820
Net income before minority interest			23,433				24,666				57,641				50,011
Minority interest			1,500				-				2,540				-
Net income			21,933				24,666				55,101				50,011
Retained earnings, beginning of the period			99,998				(16,987	)			66,830				(42,332	)
Retained earnings, end of the period		$	121,931			$	7,679			$	121,931			$	7,679
Income per common share – basic		$	0.09			$	0.11			$	0.23			$	0.22
Income per common share – diluted		$	0.09			$	0.11			$	0.23			$	0.22
Weighted average number of shares outstanding:
– basic			247,519,214				229,490,917				239,834,436				223,840,535
– diluted			250,661,197				231,193,423				242,740,664				225,127,826

See accompanying notes to interim consolidated financial statements.

RED BACK MINING INC.

INTERIM CONSOLIDATED STATEMENTS OF CASH FLOWS

(in Thousands of United States Dollars, Unaudited)

		Three months ended								Six months ended
		June 30								June 30
		2010				2009				2010				2009
Cash flows from operating activities
Net income		$	21,933			$	24,666			$	55,101			$	50,011
Items not affecting cash
Amortization and depreciation			17,603				11,689				31,933				21,778
Accretion			115				134				230				269
Deferred charges			103				33				183				33
Foreign exchange gain			-				(472	)			(2,671	)			(472	)
Future income taxes			5,387				1,175				9,128				1,820
Gain on sale of marketable securities			-				-				-				(3,020	)
Minority interest			1,500				-				2,540				-
Shares issued as a donation (note 7(a)(ii))			-				-				484				-
Stock based compensation			21,360				(255	)			23,808				1,308
Write-off of exploration costs			-				-				166				-
			68,001				36,970				120,902				71,727
Net changes in non-cash working capital items
Accounts receivable and prepaid expenses			(6,730	)			(880	)			(8,673	)			(1,884	)
Inventories			(7,992	)			(6,171	)			(10,767	)			(7,686	)
Accounts payable and accrued liabilities			10,151				(4,805	)			(972	)			(7,472	)
			63,430				25,114				100,490				54,685
Cash flows used in investing activities
Mineral properties and related expenditures			(35,141	)			(21,646	)			(66,520	)			(42,724	)
Purchase of property, plant and equipment			(27,191	)			(17,676	)			(29,370	)			(42,543	)
Purchase of marketable securities			(954	)			-				(954	)			-
Proceeds from sale of marketable securities			-				-				-				26,297
			(63,286	)			(39,322	)			(96,844	)			(58,970	)
Cash flows from financing activities
Common shares issued			578,550				5,688				582,154				134,870
Debt repayment			-				-				-				(28,000	)
Deferred charges			-				(700	)			-				(700	)
			578,550				4,988				582,154				106,170
Effect of exchange rate changes on translation of cash denominated in a currency other than the US dollar			(8,921	)			11,696				(5,783	)			13,088
Increase in cash			569,773				2,476				580,017				114,973
Cash and cash equivalents, beginning of the period			160,715				134,702				150,471				22,205
Cash and cash equivalents, end of the period		$	730,488			$	137,178			$	730,488			$	137,178

See accompanying notes to interim consolidated financial statements.

INTERIM CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

(in Thousands of United States Dollars, Unaudited)

		Three months ended								Six months ended
		June 30								June 30
		2010				2009				2010				2009
Income for the period		$	21,933			$	24,666			$	55,101			$	50,011
Gain on marketable securities reclassified to net income on realization			-				-				-				(5,044	)
Foreign exchange gain on net assets denominated in a currency other than the US dollars reclassified to net income on realization			-				(472	)			(2,671	)			(472	)
Unrealized gain on marketable securities available for sale, net of applicable future income taxes			572				-				572				-
Unrealized foreign exchange gain (loss) on net assets denominated in a currency other than the US dollar			(8,921	)			11,696				(5,783	)			13,088
Total other comprehensive income			(8,349	)			11,224				(7,882	)			7,572
Comprehensive income for the period		$	13,584			$	35,890			$	47,219			$	57,583

See accompanying notes to interim consolidated financial statements.

RED BACK MINING INC.

NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS

FOR THE SIX MONTHS ENDED JUNE 30, 2010 AND 2009

(Tables in Thousands of United States Dollars, Unaudited)

1.	Nature of Operations and Basis of Presentation
	Red Back Mining Inc. (“Red Back” or the “Company”) is a mineral resource corporation engaged in operating, exploring, acquiring and developing mineral properties. The Company currently owns two gold mines in West Africa. In Ghana, it holds a 100% interest in the producing Chirano Gold Mine (“Chirano”). Upon the Government of Ghana exercising its right to back-in to a 10% ownership of Chirano Gold Mines Limited (“CGML”), at no cost, the Company will hold a 90% interest in Chirano with the Government of Ghana holding 10%. In Mauritania, the Company holds a 100% interest in the Tasiast Gold Mine (“Tasiast”). The Company also holds various other exploration properties in Ghana, Mauritania and Côte D’ Ivoire.
	The interim consolidated financial statements are prepared in accordance with Canadian generally accepted accounting principles applicable to interim financial statements. They follow accounting policies and methods of their application consistent with the annual consolidated financial statements as at December 31, 2009, but they do not conform in all respects with the disclosure requirements of generally accepted accounting principles for annual financial statements. Accordingly, they should be read in conjunction with the Company’s December 31, 2009 annual consolidated financial statements.
2.	Marketable Securities
	Marketable securities consist of shares in a public company that has been classified as available for sale financial assets. They are recorded at their fair value of CAD $0.80, calculated based on the June 30, 2010 closing price on the relevant stock exchange. The Company’s original cost of the shares was CAD $0.50 per share.

3. Inventories

			June 30, 2010				December 31, 2009
	Stockpile ore		$	27,290			$	24,059
	Dump leach material			6,010				4,521
	Gold in circuit			5,071				3,442
	Gold in safe			2,784				4,718
	Materials and supplies			46,391				40,039
			$	87,546			$	76,779

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4. Property, Plant and Equipment

			June 30, 2010												December 31, 2009
							Accumulated				Net Book								Accumulated				Net Book
			Cost				Depreciation				Value				Cost				Depreciation				Value
	Plant and equipment		$	297,907			$	53,641			$	244,266			$	287,540			$	39,706			$	247,834
	Motor vehicles			4,845				2,769				2,076				4,284				2,406				1,878
	Buildings			11,647				2,461				9,186				11,475				1,921				9,554
	Construction in progress			29,349				-				29,349				9,980				-				9,980
			$	343,748			$	58,871			$	284,877			$	313,279			$	44,033			$	269,246

5. Mineral Properties and Related Expenditures

											Other
			Chirano				Tasiast				Projects				Total
	Balance, December 31, 2008		$	126,016			$	249,276			$	6,106			$	381,398
	Exploration and evaluation costs			6,302				15,868				2,206				24,376
	Development expenditure			49,207				12,392				-				61,599
	Change in estimated asset retirement obligations			-				1,333				-				1,333
	Amortization			(13,765	)			(23,779	)			-				(37,544	)
	Write-off of deferred exploration costs			-				-				(2,110	)			(2,110	)
	Balance, December 31, 2009		$	167,760			$	255,090			$	6,202			$	429,052
	Exploration and evaluation costs			8,185				18,235				1,026				27,446
	Development expenditure			31,852				7,222				-				39,074
	Amortization			(10,309	)			(6,791	)			-				(17,100	)
	Write-off of deferred exploration costs			-				-				(166	)			(166	)
	Balance, June 30, 2010		$	197,488			$	273,756			$	7,062			$	478,306

Included in the above balance for Chirano are $42.1 million (December 31, 2009: $32.1 million) of stripping costs incurred subsequent to commencement of production. Amortization of these costs during the three and six months ended June 30, 2010 amounted to $2.6 million and $3.4 million respectively (June 30, 2009: $nil).

Chirano Gold Mine

Chirano comprises one mining lease and one prospecting license held through the Company’s 100% owned subsidiary, CGML. Upon the Government of Ghana exercising its right to back-in to a 10% ownership of CGML, at no cost, the Company will hold a 90% interest in CGML with the Government of Ghana holding 10%.

Tasiast Gold Mine

Tasiast comprises one mining lease held through the Company’s 100% owned subsidiary Tasiast Mauritanie Limited SA (“TMLSA”).

Other Exploration Projects

The Company owns interests in a number of other exploration properties in Ghana, Mauritania and Côte D’Ivoire. These interests are represented by various prospecting licenses and option agreements. Exploration on these properties is ongoing.

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6. Asset Retirement Obligations

		Six Months Ended June 30, 2010												Year Ended
			Chirano			Tasiast				Total				December 31, 2009
	Balance, beginning of period		$	7,512			$	3,980			$	11,492			$	9,768
	Change in estimate			-				-				-				1,333
	Accretion expense			150				80				230				391
	Balance, end of period		$	7,662			$	4,060			$	11,722			$	11,492

	The Company has calculated the fair value of the asset retirement obligations using a discount rate of 4.0%.
7.	Share Capital

(a) The Company has an unlimited number of without par value common shares authorized of issuance.

	Shares Issued and Outstanding:		Six Months Ended June 30, 2010								Year Ended December 31, 2009
			Number of Shares				Amount				Number of Shares				Amount
	Balance, beginning of period			231,826,634			$	758,243				206,095,970			$	607,914
	Issued by short-form prospectus (i)			-				-				22,000,000				126,966
	Issued as a share donation (ii)			28,250				484				-				-
	Issued by private placement (iii)			24,000,000				576,797				-				-
	Issued on exercise of options			827,000				5,357				3,730,664				17,512
	Fair value of options exercised (iv)			-				1,534				-				5,851
	Balance, end of period			256,681,884			$	1,342,415				231,826,634			$	758,243

		(i)	On February 12, 2009, the Company raised gross proceeds of $132.5 million (CAD $165 million) by issuing 22.0 million common shares at a price of CAD $7.50 per share under a short form prospectus financing.
		(ii)	On March 1, 2010 the Company made a donation of 28,250 common shares from treasury at a total deemed fair value of approximately CAD $500,000.
		(iii)	On May 7, 2010, the Company raised gross proceeds of $577 million (CAD $600 million) by issuing 24.0 million common shares at a price of CAD $25 per share under a private placement financing.
		(iv)	Upon exercise of options the pro-rata carrying value is recognized in share capital and the contributed surplus is reduced accordingly.
	(b)	The Company has two stock option plans (the “2007 Plan” and the “2009 Plan”) to grant incentive stock options to directors, officers, employees and consultants of the Company. The term of any option granted under both plans is fixed by the Board of Directors and may not exceed 10 years from the date of grant. No optionee shall be entitled to a grant of more than 10% of the Company’s outstanding issued shares. The vesting of options is at the discretion of the Board.

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Changes in the number of issued and outstanding options are outlined in the table below:

			Six Months Ended								Year Ended
			June 30, 2010								December 31, 2009
							Weighted								Weighted
							Average								Average
			Options				Exercise Price				Options				Exercise Price
			Outstanding				(CAD $)				Outstanding				(CAD $)
	Balance, beginning of period			5,733,336				8.30				7,379,000				5.84
	Cancelled			-				-				(1,025,000	)			6.81
	Exercised			(827,000	)			6.79				(3,730,664	)			5.30
	Forfeited			(225,000	)			8.49				(110,000	)			6.08
	Granted			1,630,000				27.28				3,220,000				9.92
	Balance, end of period			6,311,336				13.39				5,733,336				8.30

		The Company used the Black-Scholes option pricing model in calculating the fair value of stock options granted in the period. The key assumptions used were a risk-free rate of 1.6% to 2.3% (2009: 0.5% - 2.2%), an expected volatility of 42% to 76% (2009: 47% - 80%), an expected option life of one to four years (2009: one to four years), no dividend payments, and a forfeiture rate of 0% to 12% (2009: 0% - 12%).
		At June 30, 2010, there was $21.2 million (December 31, 2009: $1.8 million) of unearned future compensation costs relating to unvested stock options expected to be recognized over the course of the next three years.
	(c)	The Company has a SAR’s Plan under which the Company can grant SAR’s up to a number equal to 2% of its issued and outstanding common shares to officers, employees and consultants or other eligible participants. Under the SAR’s Plan, SAR recipients are entitled to receive the cash value equal to the increase in the price of Red Back common shares between the time of grant and the time of the exercise of the SAR’s. The term and vesting conditions of any SAR granted under the plan is fixed by the Board of Directors. No SAR recipient is entitled to a grant of SAR’s exceeding 1% of the Company’s outstanding issued shares.

			Six Months Ended								Year Ended
			June 30, 2010								December 31, 2009
			Outstanding				Fair				Outstanding				Fair
			SAR’s				Value				SAR’s				Value
	Balance, beginning of period			1,550,000			$	1,442				-			$	-
	Exercised			(63,000	)			(563	)			-				-
	Forfeited			(150,000	)			(442	)			-				-
	Granted			325,000				-				1,550,000				-
	Change in value			-				17,621				-				1,442
	Balance, end of period			1,662,000			$	18,058				1,550,000			$	1,442

Unearned future compensation costs for unvested SAR’s expected to be recognized over the course of the next two years account for $10.5 million (December 31, 2009: $1.2 million) of the above balance.

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(d) The Company has a DSU’s Plan under which the Company can grant DSU’s up to a number equal to 1% of its issued and outstanding common shares to non-executive directors of the Board. Under the DSU’s Plan, DSU recipients are entitled to receive the cash value of Red Back common shares at the time of their retirement. The vesting conditions of any DSU granted under the plan are fixed by the Board of Directors.

		Six Months Ended June 30, 2010								Year Ended December 31, 2009
		Outstanding DSU’s				Fair Value				Outstanding DSU’s				Fair Value
Balance, beginning of period			99,000			$	1,392				-			$	-
Granted			52,000				1,334				99,000				1,383
Redeemed			(16,000	)			(316	)			-				-
Change in value			-				1,055				-				9
Balance, end of period			135,000			$	3,465				99,000			$	1,392

(e) In 2009, the Company granted cash-settled share-based awards based on the increase in Red Back’s share price during the period of time in 2009 when no equity-based compensation plan was available to certain officers and employees. The estimated unearned future compensation costs relating to these incentive awards at June 30, 2010 is $2.1 million (December 31, 2009: $4.9 million) and is expected to be recognized over the course of the next 6 to 12 months.

8. Contributed Surplus

		Six Months Ended				Year Ended
		June 30, 2010				December 31, 2009
Balance, beginning of period		$	7,201			$	10,506
Fair value of stock-based compensation			14,296				2,546
Fair value of options exercised			(1,534	)			(5,851	)
Balance, end of period		$	19,963			$	7,201

9. Related Party Transactions

During the six months ended June 30, 2010 the Company paid $0.6 million (June 30, 2009: $0.2 million) to a company controlled by a director for management services.  At June 30, 2010, $nil was due to this company.

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10. Segmented Information

		Three Months Ended June 30, 2010
		Ghana				Mauritania				Others				Total
Gold revenues		$	68,074			$	62,973			$	-			$	131,047
Operating costs and expenses			(36,846	)			(22,163	)			-				(59,009	)
Depreciation, amortization and accretion			(9,130	)			(8,584	)			-				(17,714	)
Profit from mining operations			22,098				32,226				-				54,324
Other income (costs)			(11,013	)			(3,988	)			(17,390	)			(32,391	)
Net income (loss)		$	11,085			$	28,238			$	(17,390	)		$	21,933

		Six Months Ended June 30, 2010
		Ghana				Mauritania				Others				Total
Gold revenues		$	117,889			$	123,154			$	-			$	241,043
Operating costs and expenses			(65,014	)			(45,969	)			-				(110,983	)
Depreciation, amortization and accretion			(15,355	)			(16,801	)			-				(32,156	)
Profit from mining operations			37,520				60,384				-				97,904
Other income (costs)			(18,426	)			(5,871	)			(18,506	)			(42,803	)
Net income (loss)		$	19,094			$	54,513			$	(18,506	)		$	55,101

		Three Months Ended June 30, 2009
		Ghana				Mauritania				Others				Total
Gold revenues		$	34,685			$	34,668			$	-			$	69,353
Operating costs and expenses			(17,187	)			(13,371	)			-				(30,558	)
Depreciation, amortization and accretion			(4,218	)			(7,600	)			-				(11,818	)
Profit from mining operations			13,280				13,697				-				26,977
Other income (costs)			(1,214	)			(39	)			(1,058	)			(2,311	)
Net income (loss)		$	12,066			$	13,658			$	(1,058	)		$	24,666

		Six Months Ended June 30, 2009
		Ghana				Mauritania				Others				Total
Gold revenues		$	67,175			$	68,036			$	-			$	135,211
Operating costs and expenses			(36,217	)			(24,206	)			-				(60,423	)
Depreciation, amortization and accretion			(7,157	)			(14,881	)			-				(22,038	)
Profit from mining operations			23,801				28,949				-				52,750
Other income (costs)			(1,276	)			(39	)			(1,424	)			(2,739	)
Net income (loss)		$	22,525			$	28,910			$	(1,424	)		$	50,011

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		As at June 30, 2010
		Ghana				Mauritania				Others				Total
Current assets		$	90,928			$	87,311			$	685,087			$	863,326
Capital assets, net of depreciation and amortization			307,586				454,246				1,658				763,490
			398,514				541,557				686,745				1,626,816
Current liabilities			(25,201	)			(17,164	)			(2,063	)			(44,428	)
Non-current liabilities			(14,387	)			(8,881	)			(3,466	)			(26,734	)
Future income tax liabilities			(17,886	)			(46,242	)			-				(64,128	)
		$	341,040			$	469,270			$	681,216			$	1,491,526

		As at December 31, 2009
		Ghana				Mauritania				Others				Total
Current assets		$	62,630			$	69,666			$	130,047			$	262,343
Capital assets, net of depreciation and amortization			274,950				422,403				1,435				698,788
			337,580				492,069				131,482				961,131
Current liabilities			(21,166	)			(16,115	)			(6,904	)			(44,185	)
Non-current liabilities			(8,702	)			(4,123	)			(1,748	)			(14,573	)
Future income tax liabilities			(8,758	)			(46,242	)			-				(55,000	)
		$	298,954			$	425,589			$	122,830			$	847,373

		Additions to Property Plant and Equipment
		Ghana				Mauritania				Others				Total
Period ended June 30, 2010		$	8,480			$	21,989			$	-			$	30,469
Period ended June 30, 2009		$	17,020			$	23,015			$	-			$	40,035

The Company operates only in the gold sector.

11. Commitments and contingencies

At June 30, 2010, the Company had purchase commitments totaling approximately $53.8 million (December 31, 2009: $17.1 million) of which approximately $39 million is for mining fleet expansion at Tasiast.

Late in 2009, CGML received a notice of re-assessment of prior years’ income tax returns denying approximately $90 million of past, current and future income tax deductions and imputing additional revenues of approximately $30 million, both related to the tax treatment of hedge contracts entered into in 2005 as part of the original bank project financing required for the construction of the Chirano Gold Mine. CGML is defending its original tax filing position. The final outcome of this matter is not determinable at this time. Should the re-assessment be ultimately upheld, it would result in the recognition of additional future income tax liabilities of approximately $22 million.

Page 11

12. Management of Capital

The Company’s objectives in managing its capital resources are to safeguard the entity’s ability to continue as a going concern and, thereby, maximize returns to shareholders in the context of the market. The Company satisfies its capital requirements through careful management of its cash resources and by utilizing bank indebtedness or equity issues, as necessary, based on the prevailing economic conditions of both the industry and the capital markets and the underlying risks characteristics of the related assets.

Red Back continues with capital expansion programs at its two mining operations. The Company expects to fund these programs from operating cash flow and existing treasury. Red Back also has an undrawn $30 million corporate bank debt facility to provide it with additional flexibility in pursuing internally generated growth initiatives, or responding to new opportunities.

The Company is not currently subject to any externally imposed requirements on its shareholders’ equity and there has been no change with respect to the overall capital risk management strategy during the six month period ended June 30, 2010.

SCHEDULE D

UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL

STATEMENTS FOR THE  SIX MONTHS ENDED JUNE 30, 2010 AND THE YEAR

ENDED DECEMBER 31, 2009

(See attached)

KINROSS GOLD CORPORATION

Pro Forma Condensed Consolidated Statement of Operations

Six months ended June 30, 2010

(Unaudited)

(in millions of United States dollars except per share amounts)

			Kinross Gold Corporation				Red Back Mining Inc.								Pro forma adjustments				Pro forma consolidated
							(Note 1)
											Note
Revenue
Metal sales			$	1,354.2			$	241.0							$	0.0			$	1,595.2
Operating costs and expenses
Cost of sales				567.3				111.0								0.0				678.3
Accretion and reclamation expense				10.4				0.2								0.0				10.6
Depreciation, depletion and amortization				241.5				31.9				4	a			33.0				306.4
				535.0				97.9								(33.0	)			599.9
Other operating costs				14.2				-								0.0				14.2
Exploration and business development				45.6				-				4	b			27.4				73.0
General and administrative				61.3				32.6								0.0				93.9
Operating earnings				413.9				65.3								(60.4	)			418.8
Other income - net				5.6				3.3								0.0				8.9
Earnings (loss) before taxes and other items				419.5				68.6								(60.4	)			427.7
Income and mining taxes recovery (expense)				(146.6	)			(11.0	)			4	c			11.0				(146.6	)
Equity in losses of associated companies				(4.0	)			0.0								0.0				(4.0	)
Non-controlling interest				(54.5	)			(2.5	)							0.0				(57.0	)
Net earnings (loss)			$	214.4			$	55.1							$	(49.4	)		$	220.1
Net earnings per share - basic	Note 5		$	0.31															$	0.20
Net earnings per share - diluted	Note 5		$	0.31															$	0.20

The accompanying notes are an integral part of these unaudited pro forma consolidated financial statements.

KINROSS GOLD CORPORATION

Pro Forma Condensed Consolidated Statement of Operations
Year ended December 31, 2009
(Unaudited)
(in millions of United States dollars except per share amounts)

			Kinross Gold Corporation				Red Back Mining Inc.								Pro forma adjustments				Pro forma consolidated
							(Note 1)
											Note
Revenue
Metal sales			$	2,412.1			$	318.4							$	0.0			$	2,730.5
Operating costs and expenses
Cost of sales				1,047.1				142.6								0.0				1,189.7
Accretion and reclamation expense				19.3				0.4								0.0				19.7
Depreciation, depletion and amortization				447.3				57.6				4	a			89.0				593.9
				898.4				117.8								(89.0	)			927.2
Other operating costs				62.3				0.0								0.0				62.3
Exploration and business development				72.5				0.0				4	b			24.4				96.9
General and administrative				117.7				20.3								0.0				138.0
Operating earnings				645.9				97.5								(113.4	)			630.0
Other income (expense) - net				(74.3	)			20.9								0.0				(53.4	)
Earnings (loss) before taxes and other items				571.6				118.4								(113.4	)			576.6
Income and mining taxes recovery (expense)				(150.8	)			(8.2	)			4	c			12.9				(146.1	)
Equity in losses of associated companies				(8.6	)			0.0								0.0				(8.6	)
Non-controlling interest				(102.3	)			(1.0	)							0.0				(103.3	)
Net earnings(loss)			$	309.9			$	109.2							$	(100.5	)		$	318.6
Net earnings per share - basic	Note 5		$	0.45															$	0.29
Net earnings per share - diluted	Note 5		$	0.44															$	0.29

The accompanying notes are an integral part of these unaudited pro forma consolidated financial statements.

KINROSS GOLD CORPORATION

Notes to the Pro Forma Condensed Consolidated Financial Statements

Six months ended June 30, 2010 and year ended December 31, 2009

(Unaudited)

(in millions of United States dollars unless otherwise stated)

1. BASIS OF PRESENTATION

The unaudited pro forma consolidated statements of operations for the six month period ended June 30, 2010 and for the year ended December 31, 2009 have been prepared by management of Kinross in accordance with Canadian generally accepted accounting principles (“Canadian GAAP”) for illustrative purposes only, to show the effect of the completed plan of arrangement entered into with Red Back Mining Inc. (“Red Back”), more fully described in Note 3, whereby Red Back common shareholders exchanged each Red Back common share for 1.778 common shares of Kinross plus 0.11 of a Kinross common share purchase warrant, resulting in the acquisition of Red Back by Kinross.

These unaudited pro forma consolidated financial statements have been compiled from and include:

	a)	An unaudited pro forma consolidated statement of operations for the six months ended June 30, 2010 combining:
		i)	the unaudited consolidated statement of operations of Kinross for the six  months ended June 30, 2010; and
		ii)	the unaudited consolidated statement of operations of Red Back for the six months ended June 30, 2010.
	b)	An unaudited pro forma consolidated statement of operations for the year ended December 31, 2009 combining:
		i)	the consolidated statement of operations of Kinross for the year ended December 31, 2009; and
		ii)	the consolidated statement of operations of Red Back for the year ended December 31, 2009.

The unaudited pro forma consolidated statements of operations for the six months ended June 30, 2010 and for the year ended December 31, 2009 have been prepared as if the transactions described in Note 3 had occurred on January 1, 2009.

It is management’s opinion that these unaudited pro forma consolidated financial statements present in all material respects, the transactions, assumptions and adjustments described in Notes 3 and 4, in accordance with Canadian GAAP.  The accounting policies used in the preparation of these statements are consistent with Kinross’ accounting policies for the year ended December 31, 2009.  These unaudited pro forma consolidated financial statements are not intended to reflect the results of operations or the financial position of Kinross which would have actually resulted had the transactions been effected on the dates indicated.  Actual amounts recorded upon finalization of the preliminary allocation of the purchase price will likely differ from those recorded in the unaudited pro forma consolidated financial statements.  Any potential synergies that may be realized and costs that may be incurred in the process of integrating of the transactions have been excluded from the unaudited pro forma financial statement information.  Further, the unaudited pro forma financial information is not necessarily indicative of the results of operations that may be obtained in the future.

Certain elements of the Red Back consolidated financial statements have been reclassified to provide a consistent format.

These unaudited pro forma consolidated financial statements should be read in conjunction with the historical financial statements and notes thereto of Kinross and Red Back.

KINROSS GOLD CORPORATION

Notes to the Pro Forma Condensed Consolidated Financial Statements

Six months ended June 30, 2010 and year ended December 31, 2009

(Unaudited)

2. SIGNIFICANT ACCOUNTING POLICIES

The accounting policies used in the preparation of these unaudited pro forma consolidated financial statements are those as set out in Kinross’ audited consolidated financial statements for the year ended December 31, 2009.  In preparing the unaudited pro forma consolidated financial information a review was undertaken to identify accounting policy differences between Kinross and Red Back where the impact was potentially material and could be reasonably estimated.  Further accounting policy differences may be identified during the course of integrating the acquisition. The significant accounting policies of Red Back are believed to conform in all material respects to those of Kinross, except as noted in Note 4.

3. BUSINESS ACQUISITION

On September 17, 2010, Kinross completed its acquisition of Red Back through a plan of arrangement, whereby Kinross acquired all of the issued and outstanding common shares of Red Back that it did not already own.

Red Back shareholders received 1.778 common shares, plus 0.11 of a Kinross common share purchase warrant for each Red Back common share held.  As a result of the transaction, Kinross issued 416.4 million common shares and 25.8 million common share purchase warrants. Kinross also issued 8.7 million fully vested replacement options to acquire Kinross common shares to previous Red Back option holders.

The business combination has been accounted for as a purchase transaction, with Kinross being identified as the acquirer and Red Back as the acquiree.

These unaudited pro forma consolidated financial statements assume the cost of acquisition includes the fair value of the Kinross shares issued, based on the issuance of 416.4 million Kinross shares at $15.73 per share, the issuance of 25.8 million Kinross common share purchase warrants valued at $117.7 million, the issuance of 8.7 million fully vested replacement stock options to acquire Kinross common shares valued at $69.8 million, and Kinross’ estimated transaction costs of $41.5 million, equalling a total price of $7,358.6 million.  The price of the Kinross common shares was calculated at the average share price of Kinross two days before, the day of, and two days after August 2, 2010, the date of announcement.  The Kinross common share purchase warrants and Kinross replacement stock options have been valued using the Black-Scholes option pricing model.

The purchase consideration also includes CDN$600 million ($580.3 million) paid to Red Back on May 7, 2010 for 24 million common shares of Red Back.

The following table sets forth a preliminary allocation of the purchase price to assets and liabilities acquired, based on preliminary estimates of fair value.  Final valuations of assets and liabilities are not yet complete due to the timing of the acquisition and the inherent complexity associated with the valuations. This is a preliminary purchase price allocation and therefore subject to adjustment over the period to completion of the valuation process and analysis of resulting tax effects.

KINROSS GOLD CORPORATION

Notes to the Pro Forma Condensed Consolidated Financial Statements

Six months ended June 30, 2010 and year ended December 31, 2009

(Unaudited)

Purchase price		(millions)
416.4 million common shares of Kinross		$	6,549.3
25.8 million Kinross common share purchase warrants			117.7
Cost of shares previously acquired			580.3
Fair value of 8.7 million Kinross replacement options			69.8
Transaction costs			41.5
		$	7,358.6
Net assets acquired
Current assets		$	884.8
Property, plant, equipment and mining interests			1,765.8
Future tax liabilities			(311.5	)
Other liabilities			(137.7	)
Non-controlling interest			(3.9	)
Goodwill			5,161.1
		$	7,358.6

4. PRO FORMA ASSUMPTIONS AND ADJUSTMENTS

The unaudited pro forma consolidated statements of operations reflect the following adjustments as if the acquisition of Red Back had occurred on January 1, 2009:

	a.	To increase depreciation expense to reflect depreciation of the fair value increment on property, plant and equipment.
	b.	To expense exploration costs that had been deferred.
	c.	To record tax impact of a. and b. above

KINROSS GOLD CORPORATION

Notes to the Pro Forma Condensed Consolidated Financial Statements

Six months ended June 30, 2010 and year ended December 31, 2009

(Unaudited)

5. PRO FORMA EARNINGS PER SHARE

The weighted average shares outstanding have been adjusted to reflect the additional shares resulting from transactions described in Notes 3 and 4 effective January 1, 2009.

Basic earnings per share
		Six months				Year ended
		ended June 30,				December 31,
		2010				2009
Weighted average number of Kinross shares outstanding for the period - basic			697.6				691.5
Adjustment to reflect acquisition of Red Back effective January 1, 2009			416.4				416.4
Pro forma weighted average number of shares outstanding for the period - basic			1,114.0				1,107.9
Pro forma adjusted net earnings		$	220.1			$	318.6
Pro forma adjusted basic earnings per share		$	0.20			$	0.29
Diluted earnings per share

		Six months				Year ended
		ended June 30,				December 31,
		2010				2009
Pro forma weighted average number of shares outstanding for the period - basic			1,114.0				1,107.9
Dilutive effects of Kinross stock options, restricted shares and warrants			3.7				5.0
Dilutive effects of instruments issued in the transaction (1)			4.1				4.1
Pro forma weighted average number of shares outstanding for the period - diluted			1,121.8				1,117.0
Pro forma adjusted net earnings		$	220.1			$	318.6
Pro forma adjusted diluted earnings per share		$	0.20			$	0.29

(1) Represents dilutive impact of stock options issued on the transaction. Warrants issued on the transaction have been excluded as they are anti-dilutive.