Kinross decides not to expand Tasiast gold mine in Africa
By Nicole Mordant
(Reuters) - Kinross Gold Corp (K.TO: Quote) will not go ahead with a $1.6 billion expansion of its Tasiast mine in Africa's northwest because of the weak gold price, the Toronto-based miner said on Tuesday, as it also reported an unexpected fourth-quarter loss.
Although Kinross was in a strong cash position and project financing talks had gone well, the company was concerned about cashflow during the 35 months of construction if the gold price fell further, said Kinross Chief Executive Paul Rollinson.
Bullion .XAU, which was last at $1,233 an ounce, is down 36 percent from its peak of $1,920 an ounce in September 2011.
"We believe in the quality of the project. It's really about how much risk tolerance we are prepared to take on future cashflows looking out three years," Rollinson said in an interview.
Kinross, the world's fifth biggest gold producer based on output, said in a statement it will "continue to assess market conditions with a view to possibly expanding Tasiast, should circumstances change". It will also focus on reducing costs at the mine, which is in Mauritania.
The expansion of the mill at Tasiast is Kinross' biggest growth project, and without it analysts are concerned about the company's growth prospects.
Rollinson said Kinross would look at merger and acquisition opportunities, as it always has.
Kinross acquired Tasiast as part of its $7.1 billion takeover of Australia's Red Back Mining in 2010. It has written down virtually all of the acquisition price of the takeover, which cost former Kinross CEO Tye Burt his job. Continued...