Kinross Gold Corporation announces that it is proceeding with the Phase Two expansion of its Tasiast mine in Mauritania, which is expected to transform Tasiast into a large, world-class operation, with low costs, and a long mine life that is expected to generate significant cash flow.
Phase Two is expected to increase mill capacity to 30,000 tonnes per day (t/d) to produce an average of approximately 812,000 gold ounces (Au oz.) per year for the first five years, at an average production cost of sales of $440 per Au oz. and all-in sustaining cost of $655 per Au oz. The project is expected to generate strong free cash flow of $2.2 billion over the life of mine. Initial construction for Phase Two is expected to begin in early 2018, with expected initial plant and infrastructure capital costs of approximately $590 million. Commercial production is expected to begin in Q3 2020.
Kinross Gold also announces its intent to proceed with the Round Mountain Phase W project in Nevada, pending completion of the permitting process, which is proceeding as planned. Phase W is expected to extend mining by five years and increase life-of-mine production by 1.5 million Au oz. at one of Kinross' top performing mines located in one of the best mining jurisdictions in the world.
Kinross expects to finance both projects with its strong balance sheet and existing liquidity, and operating cash flows. As of June 30, 2017, Kinross had cash and cash equivalents of $1,061.3 million, and available credit of $1,433.1 million, for total liquidity of approximately $2.5 billion. Kinross also has no debt maturities prior to 2021. Maintaining balance sheet strength and financial flexibility continue to be top priorities as the Company develops both projects.
The Phase Two and Phase W feasibility studies have been reviewed by third-party independent reviewers and were found to be consistent with industry best practices.
J. Paul Rollinson, President and CEO, made the following comments in relation to the Tasiast Phase Two and Round Mountain Phase W projects:
"Our decision to proceed with the Tasiast Phase Two expansion underscores our determination to realize the potential of this world-class asset and generate significant value for our shareholders. Our continued focus on financial discipline and technical excellence has resulted in lower capital requirements than originally forecast, which would materially improve project IRR and NPV.
"With Phase Two, Tasiast's annual production is expected to increase to more than 800,000 gold ounces per year for the first five years and significantly reduce costs. This strong improvement in Tasiast's performance is expected to positively impact overall company performance metrics, strengthening our production profile and increasing cash flow.
"We have applied the same financial and technical rigour to the Phase W expansion at Round Mountain. Lower operating costs, combined with an optimized mine plan, have contributed to a further de-risking of the project and improved returns. Phase W is expected to add five years of mining at one of our best performing operations.
"We are delivering on our strategy while opening a new chapter as we invest in our long-term future growth. In short, this is great news for our shareholders."