Kinross Gold Corporation (TSX:K)(NYSE:KGC) today announced the
results of its pre-feasibility study (PFS) for its Tasiast
expansion project. Based on these results, the Company has decided
to proceed with a feasibility study on an expanded Tasiast
operation with a 38,000 tonne per day (tpd) mill.
The PFS was based on constructing a new 30,000 tonne tpd mill at
Tasiast utilizing heavy fuel oil as an energy source. It assumed a
$1,500 per ounce gold price for overall project economics and,
consistent with the Company's year-end mineral reserve estimates, a
$1,200 per ounce gold price for pit design purposes. The PFS
estimates are based on a pit design mineral resource estimate of
approximately 10 million recovered gold ounces, which does not
include additional known resources estimated using a gold price
assumption above $1,200 per ounce. In addition, the PFS estimates
do not include potential district exploration upside.
The study found that during the first five years of production,
a 30,000 tpd mill would be expected to have average gold production
of approximately 830,000 ounces per year, with average cash
costs(1) of approximately $500 per ounce, and average all-in
sustaining costs(2) of approximately $735 per ounce. The expected
initial capital cost would be approximately $2.7 billion(3). The
PFS indicated an estimated IRR for the project of approximately 11%
and an estimated NPV of approximately $1.1 billion.
In addition, the PFS incorporated trade-off studies which
considered utilizing the existing 8,000 tpd mill capacity at
Tasiast in addition to a new 30,000 tpd mill. These studies
concluded that a single new 38,000 tpd mill would be expected to
provide the optimum economics for an expanded project. Based on
these results, the Company is proceeding to a full feasibility
study (FS) on an expanded Tasiast operation with a 38,000 tpd mill.
The FS work process will begin immediately, and is now scheduled
for expected completion in the first quarter of 2014. Following
completion of the FS, the Company will make a decision on whether
to complete engineering and proceed with construction. The decision
will depend on a range of factors, including gold price assumptions
and projections, expected economic returns, and various technical
and other considerations.
"Although there is considerable work to be done at the
feasibility study level before we decide whether to proceed with
construction, the results of the PFS are encouraging," said CEO J.
Paul Rollinson. "As we continue to evaluate the project, we remain
firmly focused on preserving the strength of our balance
sheet."
The FS will assess construction of a standard carbon-in-leach
(CIL) circuit with a primary crusher and SAG mill, in addition to
the existing dump leach facilities. The FS will assume an open-pit
mining sequence based on developing a series of pushbacks that
would allow the mine to encounter expected higher grade ore early
in the mine life. A variable cut-off grade strategy is expected to
be applied to bring gold production forward and stockpile
lower-grade material for processing later in the mine life.
The FS will explore a number of opportunities to optimize the
project and improve overall economics, including the potential for
implementing lower-cost natural gas power. Kinross is currently
part of a joint venture which is working to advance the
commercialization of power generated by natural gas supply located
offshore of Mauritania.
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Summary of PFS estimates for 30,000 tpd mill at Tasiast
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Operational metric Estimate (weighted average)
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Mill throughput 30,000 tonnes per day
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Life of mine(4) (end of production) 2033
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Ounces recovered - life of mine 10.0 million(5) -- based on pit
design using assumed gold price of
$1,200/ounce
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Estimated ore processed - life of mine CIL: 196 million tonnes
Dump leach: 46 million tonnes
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Average annual production (ounces) - 755,000-855,000 (830,000)
first five years
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Average annual production (ounces) - 400,000-500,000 (475,000)
life of mine
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Cash cost per ounce - first five years $475-575/ounce ($500)
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Cash cost per ounce - life of mine $675-775 ($700)
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All-in sustaining cost per ounce - first $710-810 ($735)
five years
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All-in sustaining cost per ounce - life $890-990 ($910)
of mine
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Average grade - first five years 2.08 g/t
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Average grade - life of mine 1.41 g/t
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Average CIL recovery - life of mine 93%
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Strip ratio - first five years 4.5
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Strip ratio - life of mine 4.6
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Peak mining rate per year 120 million tonnes
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Initial capital expenditure (April 1, $2.7 billion
2013 forward)
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IRR(6) 11%
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NPV(6) $1.1 billion
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Key assumptions:
Energy source Heavy fuel oil
Gold price (pit design) $1,200/ounce
Gold price (economic evaluation) $1,500/ounce
Discount rate 5%
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Kinross will hold a conference call and audio webcast on Monday,
April 29, at 8 a.m. ET to discuss the results of the Tasiast PFS,
followed by a question-and-answer session. To access the call,
please dial:
Canada & US toll-free - 1-800-319-4610
Outside of Canada & US - 1-604-638-5340
Replay (available up to 14 days after the call):
Canada & US toll-free - 1-800-319-6413; Passcode - 4137
followed by #.
Outside of Canada & US - 1-604-638-9010; Passcode - 4137
followed by #.
You may also access the conference call on a listen-only basis
via webcast at our website www.kinross.com. The audio webcast will
be archived on our website at www.kinross.com.
(1) Cash costs include operating costs and royalties.
(2) All-in sustaining cost includes operating costs, royalties, sustaining
capital, and capitalized stripping, and does not include any allocation
of regional or corporate overhead costs.
(3) Includes estimated capital expenditures from April 1, 2013 forward, and
a contingency of $290 million.
(4) Defined as April 1, 2013 forward
(5) The $1,200 pit design in the PFS for purposes of economic evaluation
does not include inferred mineral resources and certain measured and
indicated mineral resources. The PFS does not result in any change to
Kinross' existing mineral reserve and mineral resource estimates for the
Tasiast project. Please refer to our most recent Annual Information Form
for Tasiast annual mineral reserve and mineral resource estimates as at
December 31, 2012.
(6) Does not include potential for improved economics related to potential
district exploration upside, potential implementation of lower-cost
natural gas generated power, or additional known mineral resource
estimates using a gold price above $1,200.
About Kinross Gold Corporation
Kinross is a Canadian-based gold mining company with mines and
projects in Brazil, Canada, Chile, Ecuador, Ghana, Mauritania,
Russia and the United States, employing approximately 9,000 people
worldwide. Kinross maintains listings on the Toronto Stock Exchange
(symbol:K) and the New York Stock Exchange (symbol:KGC).
Cautionary statement on forward-looking information
All statements, other than statements of historical fact,
contained or incorporated by reference in this news release, but
not limited to, any information as to the future financial or
operating performance of Kinross, constitute "forward-looking
information" or "forward-looking statements" within the meaning of
certain securities laws, including the provisions of the Securities
Act (Ontario) and the provisions for "safe harbour" under the
United States Private Securities Litigation Reform Act of 1995 and
are based on expectations, estimates and projections as of the date
of this news release. Forward-looking statements include, without
limitation, statements with respect to: possible events, the future
price of gold and silver, the estimation of mineral reserves and
mineral resources, the realization of mineral reserve and mineral
resource estimates, the timing and amount of estimated future
production, costs of production, capital expenditures, costs and
timing of the development of projects and new deposits, success of
exploration, development and mining activities, permitting
timelines, currency fluctuations, requirements for additional
capital, government regulation of mining operations, environmental
risks, unanticipated reclamation expenses, title disputes or claims
and limitations on insurance coverage. The words "aim",
"anticipates", "plans", "expects", "indicative", "intend",
"scheduled", "timeline", "estimates", "forecasts", "guidance",
"opportunity", "outlook", "potential", "projected", "schedule",
"seek", "strategy", "study" (including, without limitation, as may
be qualified by "feasibility" and "pre-feasibility"), "targets",
"models", or "believes", or variations of or similar such words and
phrases or statements that certain actions, events or results
"may", "could", "would", or "should", "might", or "will be taken",
"occur" or "be achieved" and similar expressions identify
forward-looking statements. Forward-looking statements are
necessarily based upon a number of estimates and assumptions that,
while considered reasonable by Kinross as of the date of such
statements, are inherently subject to significant business,
economic and competitive uncertainties and contingencies.
The estimates, models and assumptions of Kinross referenced,
contained or incorporated by reference in this news release, which
may prove to be incorrect, include, but are not limited to, the
various assumptions set forth herein and in our most recently filed
Annual Information Form and our full-year 2012 Management's
Discussion and Analysis as well as: (1) there being no significant
disruptions affecting the operations of the Company or any entity
in which it now or hereafter directly or indirectly holds an
investment, whether due to labour disruptions, supply disruptions,
power disruptions, damage to equipment or otherwise; (2) political
and legal developments in Mauritania being consistent with the
Company's current expectations; (3) the exchange rate between the
Canadian dollar, Mauritanian ouguiya and the U.S. dollar being
approximately consistent with current levels; (4) certain price
assumptions for gold and silver; (5) prices for diesel, natural
gas, fuel oil, electricity and other key supplies being
approximately consistent with current levels; (6) production and
cost of sales forecasts for the Company, and entities in which it
now or hereafter directly or indirectly holds an investment,
meeting expectations; (7) the accuracy of the current mineral
reserve and mineral resource estimates of the Company (including
but not limited to ore tonnage and ore grade estimates) and any
entity in which it now or hereafter directly or indirectly holds an
investment; (8) labour and materials costs increasing on a basis
consistent with Kinross' current expectations; (9) the viability of
the Tasiast mine (including but not limited to the impact of ore
tonnage and grade variability reconciliation analysis) as well as
permitting, development and expansion (including but not limited
to, the results of the feasibility study) being consistent with
Kinross' current expectations; (10) the terms and conditions of the
Tasiast legal and fiscal stability agreement being interpreted and
applied in a manner consistent with their intent and Kinross'
expectations; and (11) access to capital markets, including but not
limited to maintaining an investment grade debt rating and securing
partial project financing the Tasiast expansion projects, being
consistent with the Company's current expectations.
Known and unknown factors could cause actual results to differ
materially from those projected in the forward-looking statements.
Such factors include, but are not limited to: fluctuations in the
currency markets; fluctuations in the spot and forward price of
gold or certain other commodities (such as diesel fuel and
electricity); increases in the discount rates applied to present
value net future cash flows based on country-specific real weighted
average cost of capital; declines in the market valuations of peer
group gold producers and the Company, and the resulting impact on
market price to net asset value multiples; changes in interest
rates or gold or silver lease rates that could impact the
mark-to-market value of outstanding derivative instruments and
ongoing payments/receipts under any interest rate swaps and
variable rate debt obligations; risks arising from holding
derivative instruments (such as credit risk, market liquidity risk
and mark-to-market risk); changes in national and local government
legislation, taxation (including but not limited to income tax,
advance income tax, stamp tax, withholding tax, capital tax,
tariffs, value-added or sales tax, capital outflow tax, capital
gains tax, windfall or windfall profits tax, royalty, excise tax,
customs/import or export taxes/duties, asset taxes, asset transfer
tax, property use or other real estate tax, together with any
related fine, penalty, surcharge, or interest imposed in connection
with such taxes), controls, policies and regulations; the security
of personnel and assets; political or economic developments in
Mauritania or other countries in which Kinross does business or may
carry on business; business opportunities that may be presented to,
or pursued by, us; operating or technical difficulties in
connection with mining or development activities; employee
relations; the speculative nature of gold exploration and
development including, but not limited to, the risks of obtaining
necessary licenses and permits; diminishing quantities or grades of
reserves; adverse changes in our credit rating; and contests over
title to properties, particularly title to undeveloped properties.
In addition, there are risks and hazards associated with the
business of gold exploration, development and mining, including
environmental hazards, industrial accidents, unusual or unexpected
formations, pressures, cave-ins, flooding and gold bullion losses
(and the risk of inadequate insurance, or the inability to obtain
insurance, to cover these risks).
Many of these uncertainties and contingencies can directly or
indirectly affect, and could cause, Kinross' actual results to
differ materially from those expressed or implied in any
forward-looking statements made by, or on behalf of, Kinross,
including but not limited to resulting in an impairment charge on
goodwill and/or assets. There can be no assurance that
forward-looking statements will prove to be accurate, as actual
results and future events could differ materially from those
anticipated in such statements. Forward-looking statements are
provided for the purpose of providing information about
management's expectations and plans relating to the future. All of
the forward-looking statements made in this news release are
qualified by these cautionary statements and those made in our
other filings with the securities regulators of Canada and the
United States including, but not limited to, the cautionary
statements made in the "Risk Factors" section of our most recently
filed Annual Information Form and full-year 2012 Management
Discussion and Analysis. These factors are not intended to
represent a complete list of the factors that could affect Kinross.
Kinross disclaims any intention or obligation to update or revise
any forward-looking statements or to explain any material
difference between subsequent actual events and such
forward-looking statements, except to the extent required by
applicable law.
Other information
Where we say "we", "us", "our", the "Company", or "Kinross" in
this news release, we mean Kinross Gold Corporation and/or one or
more or all of its subsidiaries, as may be applicable.
For impairment assessment purposes, the Company considers the
PFS results as well as other factors including, but not limited to,
estimated pit shell mineral resources using a gold price assumption
of $1,400 (vs. $1,200) per ounce, expected throughput of 38,000
tpd, consensus gold prices, additional exploration potential and
NAV multiples and project optimization. As a result, the values
determined under the Company's impairment analysis at December 31,
2012 may differ from the NPV values resulting from the 30,000 tpd
PFS.
The technical information about Tasiast contained in this news
release has been prepared under the supervision of, and verified
by, Mr. James K. Fowler, an officer with the Company who is a
"qualified person" within the meaning of National Instrument
43-101.
This news release contains forward-looking information subject
to the risks and assumptions set out in our Cautionary Statement on
Forward-Looking Information located on page three of this release.
All dollar amounts in this release are expressed in U.S. dollars,
unless otherwise noted.
Contacts: Media Contact Kinross Gold Corporation Steve Mitchell
Vice-President, Corporate Communications
416-365-2726steve.mitchell@kinross.com Investor Relations Contact
Kinross Gold Corporation Tom Elliott Vice-President, Investor
Relations 416-365-3390tom.elliott@kinross.com
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