3 Min Read
(Recasts, adds CEO interview)
By Nicole Mordant
March 30 (Reuters) - Kinross Gold Corp said on Wednesday it plans to go ahead with a $300 million, first-phase expansion of its Tasiast gold mine in North Africa that will nearly double the mine's production and slash its production costs.
Kinross, the world's fifth biggest gold miner, also unveiled a smaller, lower-cost second-phase expansion for the mine in Mauritania but said it is still deciding whether to go ahead with it.
The Canadian miner now expects the two-phase expansion to cost $920 million, down from a 2014 estimate of $1.6 billion largely because it has reduced the size of the project to 30,000 tonnes per day from 38,000 tonnes per day.
"We are renovating as opposed to building a new mill. We will utilize components in the existing mill," Kinross Chief Executive Paul Rollinson said in an interview.
The Canadian miner said in November that it was studying the expansion of Tasiast in a "bite-sized," two-step expansion that was less risky in an environment of lower gold prices.
Hit by a nearly 40 percent slump in bullion prices since late 2011, gold producers globally have slashed capital spending and halted or slimmed down new mine builds and expansion projects.
The first expansion phase, which Kinross will proceed with immediately, will expand the mine's mill capacity to 12,000 tonnes per day from 8,000 currently.
Full production is expected by the end of the first quarter of 2018. The expansion will see average annual production at Tasiast rise by 87 percent to 409,000 ounces. Production costs are expected to drop by 48 percent to $535 an ounce.
The expansion of the mill at Tasiast is Kinross's biggest growth project, and without it analysts are concerned about the company's growth prospects unless the miner makes an acquisition.
A potential go-ahead decision for the second-phase expansion, which would turn Tasiast into Kinross's biggest and lowest-cost operation, is targeted for the end of 2017.
Asked if Kinross would consider taking on a partner to help fund the second phase, Rollinson said it was "not something Kinross was currently contemplating" although the company has had "a lot of approaches."
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. (Additional reporting by Manish Parashar in Bengaluru; Editing by Don Sebastian and Jonathan Oatis)