Kinross Gold Corp to proceed with first phase of Tasiast expansion – by Peter Koven (Financial Post – March 30, 2016)

Kinross Gold Corp. has greenlighted development of the first phase of its Tasiast expansion project in Mauritania, positioning the company to finally generate some value from the long-troubled operation.

Toronto-based Kinross plans to invest US$300 million to boost capacity at the Tasiast mill to 12,000 tonnes a day, up 50 per cent from the current level. That move is expected to increase production at the mine by 87 per cent to 409,000 ounces a year, according to a feasibility study, and make the money-losing operation profitable.

The ultimate plan is to implement a second phase of the expansion, which would boost capacity to 30,000 tonnes a day and raise annual production to 777,000 ounces. The estimated cost for that second phase is US$620 million, and Kinross expects to make a decision on it by the end of 2017.

Prior expansion plans for Tasiast called for a significantly bigger operation, but Kinross pulled back on them due to concerns about high construction costs, high risk and low returns. The company decided that a cheaper “phased” approach was a better move in a volatile gold price environment.

“What’s great for me is for US$300 million of capital, we basically double the production and drop the operating costs significantly. It really creates a great mine that anyone would want to own,” chief executive Paul Rollinson said in an interview.

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