Kinross going ahead with expansion of Alaska gold mine

Shares in Kinross Gold (TSX:G) (NYSE:KGC) jumped Tuesday in pre-market trading as the Canadian miner announced is going ahead with an initial expansion of its Fort Knox mine, located in one of Alaska’s largest gold producing areas.

The project, to be carried out over an area known as Gilmore, immediately west of Fort Knox, is expected to initially extend the mine life of the open-pit operation by six years to 2027, and leaching to 2030.

Kinross says it’ll spend an initial capital cost of only $100 million, increasing life-of-mine production by about 1.5 million gold equivalent ounces.

Project is expected to extend the mine life of the Fort Knox open-pit gold operation by six years to 2027, and leaching to 2030.

"The Gilmore project and the addition of estimated mineral resources improves value and is expected to be a key contributor to the future growth of our company,” President and CEO J. Paul Rollinson said in the statement.

The first phase of the Gilmore expansion is expected to generate an internal rate of return (IRR) of 17% and net present value (NPV) of $130 million based on a $1,200/oz. gold price, and an IRR of 26% and NPV of $239 million based on a $1,300/oz. gold price, the company said.

Kinross started drilling on Gilmore land back in 2014, having determined that the Fort Knox orebody continued to the west, with the area containing 2.1 million gold ounces in proven and probable reserves.

About 73,000 metres of core and reverse-circulation drilling enabled Kinross to add to Fort Knox reserves and put resource numbers on the Gilmore ground, where it obtained mineral rights in December.

Kinross ability to economically recover gold from lower grade ore by processing it on a heap leach pad present at the site has been key to keeping the mine in operation so close to the end of its productive life.

Without an expansion Fort Knox would have run out of ore in 2021.

Shares in the company were up 1.05% in Toronto to Cdn$4.80 by 9:37 AM and 1.37% higher in New York to $3.70 around 9:50 a.m. ET.