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Kinross Steps Up Tasiast Mine Expansion

Zacks Equity Research

Kinross Gold Corporation (KGC) announced that it is moving ahead with its plans to further expand its Tasiast project in Mauritania with a full feasibility study (:FS) for a 38,000 ton per day (tpd) mill. Kinross decided to give the green signal for the expansion after the announcement of the pre feasibility (PFS) study results.

The PFS was based on constructing a new 30,000 tpd mill at Tasiast using heavy fuel oil as an energy source. The PFS found that during the first five years of production, a 30,000 tpd operation would yield average annual gold production of 830,000 ounces, at an initial capital cost of $2.7 billion, and an all-in sustaining cost of $735 per ounce.

Kinross is also looking to deploy the existing 8,000 tpd mill at Tasiast in addition to a new 30,000 tpd mill. These studies concluded that a single new 38,000 tpd mill would be expected to provide the optimum economics for an expanded project. Based on these results, Kinross is proceeding to a full FS on an expanded Tasiast operation with a 38,000 tpd mill.

The FS work process will begin immediately, and is expected to complete in the first quarter of 2014. After the FS is complete, Kinross will make a decision on whether to complete engineering and proceed with construction. Kinross will base its decision on a number of factors, including gold price assumptions and projections, expected economic returns, and various technical and other considerations.

Kinross, which is among the prominent gold miners along with Barrick Gold Corporation (ABX), Newmont Mining Corporation (NEM) and Goldcorp Inc. (GG), is primarily involved in the exploration and operation of gold mines and benefits from higher gold prices, exploration projects and acquisitions.

Kinross currently carries a Zacks Rank #4 (Sell).

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