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Kinross taps Americas for interim growth

Mining major Kinross Gold (TSX:K) is tapping its North and South American assets for production growth after it paused further investment in the Tasiast Phase 2 development earlier this year.
Kinross taps Americas for interim growth Kinross taps Americas for interim growth Kinross taps Americas for interim growth Kinross taps Americas for interim growth Kinross taps Americas for interim growth

Kinross banks on growth projects in the Americas, such as Bald Mountain, in Nevada, to sustain its production profile

Henry Lazenby at Colorado Springs

Significant brownfields development opportuities at its North American operations provided the potential to drive a new wave of value creation for shareholders and bolster the production pipeline in light of the increased perceived risk in Mauritania. While the recent Tasiast Phase 1 was ramping up, the company was looking at incremental growth projects throughout its portfolio to bolster the production outlook.

This followed news earlier this year the Mauritania government wanted to enter talks to see how the jurisdiction could secure more benefits from the investment.

"A central focus for Kinross is the Americas," Rollinson noted, "which we consider a strong and stable region that supports five mines that account for more than half of our annual output."

Rollinson said work to advance the Vantage Complex at the Bald Mountain mine, in Nevada, was proceeding well and remained on schedule and on budget. The Vantage Complex would provide access to untapped resources and enable the mine to continue delivering strong production over an extended mine life.

The 2017 reserve statement showed nearly 1.7 million ounces remaining. Heap leach pad and processing facilities commissioning were expected to start in the first quarter of 2019. The overall construction was well advanced, with engineering works 95% complete.

All major equipment and construction packages had now been awarded. 

At Round Mountain, its other major Nevada-based operation, the Phase W project was progressing on plan and budget. Phase W would extend the mine life by five years and increase life-of-mine output by 1.5 million ounces of gold, at one of the company's top performing mines.

The company was looking forward to encountering initial Phase W ore by mid‐2019. Pre-stripping was proceeding well, and the new dewatering pond had been completed. Earthworks to prepare for the new infrastructure area and preparations for construction of the new heap leach facility were both mainly complete.

The initial construction activities for the vertical carbon-in‐column plant had started and the remaining construction and procurement contracts were progressing well, he said. Detailed engineering was now 95% complete.

The company also recently announced that it would proceed with the initial Fort Knox Gilmore expansion project, in Alaska. The project was aimed at extending the mine life to 2030. The low-capital cost project would generate an internal rate of return of 17% at a gold price of US$1,200/oz, and could potentially increase life‐of‐mine production by about 1.5 million gold equivalent ounces.

Early works on the new heap leach pad were underway and permitting was now complete. Initial production from Gilmore was slated for early 2020. The project entailed two phases of a potential multiphase layback of the openpit, Rollinson said.

Kinross also continued to explore the prospectivity and upside potential of the Fort Knox area, as the overall orebody had not yet been fully delineated to the west, south and east.

In South America, Kinross was also looking at La Coipa, in Chile, where it was working to take the project from prefeasibility to the feasibility stage. At the end of August, all permits were in place, rendering the project technically shovel ready. The Lobo Marte deposit also added upside being only 80km away.

"I think we'll be able to improve on the current five-year mine life," Rollinson said.

Kinross had forecast about 2.5 million gold equivalent ounces during 2018. The company expected to meet its production cost of sales guidance of $730/oz gold equivalent and its all‐in sustaining cost at $975/oz sold.

The company was on track to meet its $1 billion capital budget this year. Rollinson said the company would likely use the improving future cash flows to further reduce is $1.7 billion debt load.

"For me its about getting ahead of the debt and the capex. I want to get the debt beast back in the cage."