Kinross Gold 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. The company said it also intends to proceed with the Round Mountain Phase W project in Nevada, pending completing of the permitting process, which is proceeding as planned.
The Phase Two expansion at Tasiast mine is expected to increase mill capacity to 30,000 metric tons per day (mt/d) to produce an average of approximately 812,000 ounces per year (oz/y) of gold for the first five years, at an average production cost of sales of $440/oz and all-in sustaining cost of $655/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 the third quarter of 2020.
Phase W at Round Mountain is expected to extend mining by five years and increase life-of-mine production by 1.5 million oz at one of Kinross’ top performing gold mines located in one of the best mining jurisdictions in the world.
“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,” said J. Paul Rollinson, president and CEO, Kinross Gold. “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.”
The improvement at Tasiast is expected to impact the company’s overall performance metrics, strengthen its production profile and increase cash flow, Rollinson said.
The Phase Two Tasiast feasibility study contemplates installing additional mill throughput of 18,000 mt/d to the Phase One project’s 12,000-mt/d capacity for a total combined capacity of 30,000 mt/d. The combined Phase One and Phase Two non-sustaining capitalized stripping is expected to be $370 million from 2018 through the first half of 2020.
The expansion would replace the two current ball mills with a new larger ball mill, and add new leaching, thickening and refinery capacity and additions to the mining fleet. A new power plant would be added to power the 30,000-mt/d mill, which is forecast to have an average production of approximately 812,000 oz/y for its first five years of mine life (2020-2024), with a forecast cumulative gold production of 6.3 million Au oz from 2020 to 2029.
The Round Mountain Phase W feasibility study contemplates a layback of the current pit, construction of a new Carbon in Column (CIC) plant and heap-leach pad, additions to the mining fleet and equipment, and relocation of some existing infrastructure. Stripping of Phase W ore is expected to begin in early 2018, pending the permitting process, which is proceeding on schedule. Construction and relocation of infrastructure is expected to be completed by the second quarter of 2019, and initial low-grade Phase W ore to be encountered in mid-2019.
Phase W is expected to add 1.5 million oz to the life of mine plan and generate an incremental IRR of 13% and incremental NPV of $135 million based on a $1,200/oz gold price and $55/bbl oil price (after tax and unlevered, from January 1, 2018 forward). Phase W is expected to generate incremental cash flow of $265 million, extend mining by five years from 2020 to 2024, and sustain the operation’s annual production at an average of approximately 341,000 oz through 2024, at an average cost of sales of $765/oz. The initial capital costs are forecast to be $230 million, plus incremental non-sustaining capitalized stripping of $215 million (2018-2020). Life of mine sustaining capital is expected to be $135 million.
“We have applied the same financial and technical rigor to the Phase W expansion at Round Mountain,” Rollinson said. “Lower operating costs, combined with an optimized mine plan, have contributed to a further de-risking of the project and improved returns.”
After the company acquired the 50% of Round Mountain it did not already own, the project team completed approximately 115,000 ft of infill, metallurgical and geotechnical drilling and rebuilt the Phase W geology model based on drilling results and historical production. A larger mineral inventory, now approximately 2 million oz compared with 1.3 million oz in the 2016 scoping study, was included in the project.
With the go-ahead decision for Phase W, procurement activities for long lead items and mining equipment have commenced, along with advanced engineering. Additional state and federal permitting for the project is required and is proceeding as planned.
