UPDATE 1-Continued weak bullion may derail Kinross Tasiast mine expansion

Wed Nov 5, 2014 7:05pm EST
 
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(Recasts with CEO interview; adds cost, production outlook)

By Nicole Mordant

Nov 5 (Reuters) - Kinross Gold Corp is unlikely to go ahead with the expansion of its Tasiast gold mine in Mauritania if the price of gold does not recover from current weaker levels, Chief Executive Paul Rollinson said on Wednesday.

Kinross, the world's fifth biggest gold producer by output, is due to make a final decision on the $1.6 billion expansion next year, possibly by the end of the first quarter.

The expansion is the Toronto-based miner's biggest growth project, and without it analysts are concerned about Kinross' growth prospects.

"If today's gold price were to persist I think we would find it challenging to go ahead because our overriding principle is balance sheet strength," Rollinson said in an interview.

"We have repeatedly said that we would never let a project in any way become too big that it might affect the balance sheet. ... Gold price matters and we are watching it closely," he said after Kinross released quarterly results that beat market expectations.

The price of gold, which plunged 28 percent last year, has fallen by nearly 10 percent in the past three weeks to four-year lows. It was last at $1,141.70.

If bullion prices remain low, Kinross could either defer a development decision on Tasiast for another year or look to bring in a joint venture partner to help fund the capital investment, Macquarie analyst Ron Stewart said in am Oct. 29 note to clients.   Continued...