Kinross Gold eyes 20% gold production increase

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Kinross Gold Corp. [K-TSX; KGC-NYSE] released forecasts for the next three years and says it expects annual production to increase by 20% to 2.9 million ounces of gold equivalent by 2023.

The company said the expected increase will coincide with an overall downward trend in production cost of sales and capital expenditures to drive strong free cash flow.

Kinross also reinstated its 2020 production forecasts, originally announced in February, 2020. At that time, the company said it expected to produce 2.4 million gold equivalent ounces this year at an all-in-sustaining cost of US$970/oz.

On Friday September 18, Kinross’ share price rose 4.3% or $0.53 to $12.84 on volume of just over 4.0 million shares. Shares are currently trading in a 52-week range of $13.50 and $4.00.

Kinross has mines and projects in the United States, Brazil, Russia, Mauritania, Chile and Ghana. They include the Fort Knox mine in Alaska, the Bald Mountain mine in Nevada, and Paracuta mine in Brazil.

Kinross President and CEO J. Paul Rollinson said the planned production increase is indicative of the strength of the company’s global portfolio and its ability to optimize mine plans and find value-enhancing opportunities “We are also studying further organic development options given our attractive pipeline of projects and promising exploration results,” he said.

“Our growing production profile, combined with our declining cost structure, is expected to drive strong and growing free cash flow,” he added.

Kinross said the three-year production growth is primarily based on additional ounces from the following:

  • Expected higher production at Kupol and life-of-mine extension at Chirano, both derived from successful exploration at the two sites. Chirano is an open-pit and underground operation in southwestern Ghana.
  • Enhancements to the Fort Knox mine plan, including accelerating production at the Gilmore expansion project at Fort Knox to bring ounces forward.
  • Continued outperformance at Paracatu, driven by improved throughput, more ounces from the reprocessing of tailings and higher grades from accelerated mining of the western area pit.
  • Higher production from the north area of Bald Mountain.

KInross is on track to meet its production, cost and sales per ounce sold, all-in sustaining cost per ounce sold and capital expenditure guidance for 2020. Other operating costs for 2020 are now expected to be approximately $140 million, which increased from the previous $100 million, mainly due to costs associated with a strike at the Tasiast mine in Mauritania, West Africa, in the second quarter and COVID-mitigation measures.

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