TORONTO, Nov 6 (Reuters) - Kinross Gold Corp is talking with three main lenders on its $1.6 billion Tasiast gold mine expansion and will review terms later this month, though the project looks unlikely if gold prices do not rebound, the company said on Thursday.
Kinross, the world’s fifth-largest gold producer by output, said it has not yet made a decision on Tasiast, its biggest expansion project, but plans to issue an update at the end of the first quarter of 2015.
Repeating that it would not advance any project that weakens its balance sheet, Kinross said key lenders considering the project are Export Development Canada, the government’s export credit agency; the U.S. Export-Import Bank, an export development branch of the U.S. government; and French development agency Proparco.
Toronto-based Kinross, which reported better-than-expected quarterly results after markets closed on Wednesday, has said it is considering financing of $700 million to $750 million toward Tasiast, with the balance from existing cash balances and cash flow.
The price of gold, which plunged 28 percent last year, has recently slumped to four-year lows. On Thursday, prices edged slightly higher to $1,144.70 an ounce as a retreat in the dollar relieved some pressure.
“At $1,100 gold, all of our mines are forecast to be cash flow positive, with the exception of Tasiast. In fact, the same is true for $1,000 gold, when the current oil price and foreign currency exchange is factored in,” Chief Executive Paul Rollinson said on a conference call with analysts.
“Nevertheless, we will continue to look for ways to further optimize our operations and reduce costs. As we begin our 2015 budgeting process, there are a number of discretionary options we will focus on in order to reduce spending without impacting operations.”
Kinross, which has operations in North and South America, Africa and Russia, currently benefits from a lower oil price and weaker foreign currencies relative to the U.S. dollar, Rollinson said.
Gold producers are looking for ways to further reduce costs as the price of bullion slides, considering job cuts, shutting mines, halting projects and scrapping dividends.
Kinross shares jumped 32 Canadian cents to C$2.59 on the Toronto Stock Exchange on Thursday morning. Dundee Capital Markets analyst John Wolfson said the share gains stem primarily from the strong quarter and operating results.
Reporting by Susan Taylor; Editing by Meredith Mazzilli