Kinross Gold puts Tasiast expansion at US$2.7 billion

The pre-feasibility was released today for the troubled Tasiast expansion project owned by Kinross Gold, and the expected initial capital cost is set at US$2.7 billion.

The IRR for the project based in north-western Mauritania is about 11%, and the estimated NPV is $1.1 billion. Some analysts called the return meagre given such a large investment and the assumed risk. The company assumes a $1,500 per ounce gold price for overall project economics and a $1,200 per ounce gold price for pit design purposes.

During the first five years of production, a 30,000 TPD mill would be expected to have average gold production of approximately 830,000. The total ounces recovered are 10 million assuming a life of mine set at 2033,  a gold price of $1,200 ounce and an open pit design.

Kinross stock ended the day down 0.91% to $5.44. The stock has lost over 40% since the beginning of the year. The 52-week range is $4.97 to $11.19.

In February Kinross took a $3.2 billion write-down attributable largely to Tasiast.

The company’s CEO remains upbeat about the African project.

“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 Kniross CEO J. Paul Rollinson.

“As we continue to evaluate the project, we remain firmly focused on preserving the strength of our balance sheet.”

The Tasiast gold mine is an open pit operation located 300 kilometres north of the capital Nouakchott.

Tasiast began commercial operations in 2008. Kinross purchased Tasiast on August 2007 from Red Back for US$7.1 billion.

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