TORONTO (Reuters) - Shares of Kinross Gold (K.TO) plummeted on Tuesday after the Canadian miner said the expansion of its massive Tasiast gold mine in Mauritania faced delays of as much as nine months and it would take a big non-cash writedown on the project.
In a report after markets closed on Monday, Kinross said six to nine months of additional analysis and planning were required at Tasiast, the West African gold mine it acquired with the takeover of Red Back Mining in August 2010. The project was originally scheduled to be completed by early 2014.
“As Kinross looks at a $6- to $7 billion capital program building three new mines, we thought it was prudent ... to stop, look and listen before we proceeded.,” Kinross Chief Executive Tye Burt said on Canada’s Business News Network (BNN) after markets closed on Tuesday.
Still, Burt said the long-term prospects for the Tasiast mine and the mining district where it was located were unchanged.
Burt did not disclose details about the goodwill writedown but said the company would reveal further details when it releases its quarterly results on February 15.
Tasiast began commercial operations in 2008 and is undergoing an expansion that will increase the amount of material it can process seven-fold. Once the project is completed, the mine is expected to produce about 1.5 million ounces of gold annually in its first eight years of operation.
The $7.1 billion acquisition of Red Back vaulted Kinross into the big leagues, transforming it into one of the fastest-growing gold miners in the world.
“Over the longer term we are convinced this value equation will work out,” said Burt.
He said he expected gold prices to keep rising in coming years as global production declines and demand from investors and central banks strengthens.
“We think the fundamentals are strong,” he said. “The gold price has potential to go a lot higher.”
Shares of Toronto-based Kinross tumbled 21 percent to close the day at C$10.39 a share.
Reporting By Pav Jordan; Editing by Frank McGurty