What is Kinross’s New Approach to the Tasiast Expansion?
Kinross is Looking Forward to New Mine Projects after 3Q15
Tasiast Expansion project
Kinross Gold (KGC) deferred its 380,000 ton-per-day (or t/d) Tasiast mill expansion in February 2015. The company believed that at that time, the gold price environment did not provide much confidence regarding the project’s economics.
However, the company had continued to explore financially prudent alternatives to realize the growth potential from Tasiast. To this end, Kinross is completing an early-stage engineering on a two-phased expansion project.
Phase One of Tasiast Expansion
Phase One would include adding incremental grinding capacity to the operation’s existing communication circuit. This will increase the mill’s throughput capacity to 12,000 t/d from the existing 8,000 t/d. According to the company, it would also enhance the processing of the harder higher grade West Branch ore, which should improve Tasiast’s current production and operating costs.
During the two years of operation, Phase One is expected to increase the average annual production to approximately 365,000 ounces per year with an estimated cash cost of $575 per ounce and an estimated all-in cost of $725 per ounce.
Phase Two of Tasiast Expansion
Phase Two of the project could further increase the total throughput to as much as 38,000 t/d by the installation of additional milling, leaching, thickening, and refining capacity. During the 3Q15 earnings call, Kinross Gold’s management sounded enthusiastic about this expansion project and said that with most infrastructure already in place, Tasiast is an attractive potential expansion project with a relatively lower execution risk. Management also stated that they look forward to sharing more detail regarding this expansion by 2016.
Kinross’s long-term production profile is in decline. This expansion could offset the decline to an extent, and any positive update on this side would be positive for Kinross’s stock.
During its latest quarterly results, Kinross’s peer, Newmont Mining (NEM) also reported that its Tanami Expansion could provide the company with a near-term production growth option. Meanwhile, Yamana Gold (AUY) is going through exploration at various mines, which resulted in higher grade asset extensions in the past.
To get exposure to gold prices, investors can also invest in gold-backed ETFs such as the SPDR Gold Shares ETF (GLD) and the iShares Gold Trust ETF (IAU).
To learn more about Kinross’s Tasiast Expansion plans, please visit Tasiast Expansion could Provide an Upside to Kinross’s Production.
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