TORONTO, ONTARIO -- (Marketwired) -- 04/29/13 -- Kinross Gold Corporation (TSX: K)(NYSE: KGC) today announced the results of its pre-feasibility study (PFS) for its Tasiast expansion project. Based on these results, the Company has decided to proceed with a feasibility study on an expanded Tasiast operation with a 38,000 tonne per day (tpd) mill.
The PFS was based on constructing a new 30,000 tonne tpd mill at Tasiast utilizing heavy fuel oil as an energy source. It assumed a $1,500 per ounce gold price for overall project economics and, consistent with the Company's year-end mineral reserve estimates, a $1,200 per ounce gold price for pit design purposes. The PFS estimates are based on a pit design mineral resource estimate of approximately 10 million recovered gold ounces, which does not include additional known resources estimated using a gold price assumption above $1,200 per ounce. In addition, the PFS estimates do not include potential district exploration upside.
The study found that during the first five years of production, a 30,000 tpd mill would be expected to have average gold production of approximately 830,000 ounces per year, with average cash costs(1) of approximately $500 per ounce, and average all-in sustaining costs(2) of approximately $735 per ounce. The expected initial capital cost would be approximately $2.7 billion(3). The PFS indicated an estimated IRR for the project of approximately 11% and an estimated NPV of approximately $1.1 billion.
In addition, the PFS incorporated trade-off studies which considered utilizing the existing 8,000 tpd mill capacity 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, the Company is proceeding to a full feasibility study (FS) on an expanded Tasiast operation with a 38,000 tpd mill. The FS work process will begin immediately, and is now scheduled for expected completion in the first quarter of 2014. Following completion of the FS, the Company will make a decision on whether to complete engineering and proceed with construction. The decision will depend on a range of factors, including gold price assumptions and projections, expected economic returns, and various technical and other considerations.
"Although there is considerable work to be done at the feasibility study level before we decide whether to proceed with construction, the results of the PFS are encouraging," said CEO J. Paul Rollinson. "As we continue to evaluate the project, we remain firmly focused on preserving the strength of our balance sheet."
The FS will assess construction of a standard carbon-in-leach (CIL) circuit with a primary crusher and SAG mill, in addition to the existing dump leach facilities. The FS will assume an open-pit mining sequence based on developing a series of pushbacks that would allow the mine to encounter expected higher grade ore early in the mine life. A variable cut-off grade strategy is expected to be applied to bring gold production forward and stockpile lower-grade material for processing later in the mine life.
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