Five years and billions of dollars after venturing into West Africa, Kinross Gold Corp. is finally delivering some encouraging news from its Tasiast mine.
The Toronto-based miner said Wednesday it is going ahead with the first stage of a two-phase expansion designed to boost gold production and drive down costs at the problem-plagued project.
The resulting output from the mine in Mauritania will be considerably smaller than first envisioned back in the heady days of 2010, when commodity prices were booming and Kinross paid $7.1-billion (U.S.) for Red Back Mining Inc., owner of Tasiast.
But the new plan marks an end to the years of persistent disappointment that followed the acquisition. Sagging gold prices and cost overruns during that period forced Kinross to write off most of the money-losing mine’s acquisition cost and Tasiast became Exhibit A in any discussion of overpriced purchases made by miners at the height of the commodity cycle.
Kinross’s new plan calls for the company to invest a relatively modest $300-million in capital expenditures during the first step of an expansion plan that makes extensive use of existing infrastructure. The company will also spend about $428-million in stripping costs, or expenses involved in removing waste material to get at ore.
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