Startups Will Drive Kinross Growth in 2009

An aerial view of Kinross Gold’s Paracatu mine in Brazil. Following expansion of
the plant in 2008, Kinross expects Paracatu to reach full capacity within the first
quarter of 2009. (Photo courtesy of Kinross Gold)
A full year of production from three mine projects completed during 2008 is expected to lift Kinross Gold’s 2009 gold production by 32% to between 2.4 million and 2.5 million oz, the company announced on January 7, 2009. Kinross’s production for 2008 was expected to come in at between 1.8 million and 1.9 million oz, up 16% from 2007.

New production during 2009 will derive from Kinross’s Paracatu expansion in Brazil, its Kupol mine in Russia and its Buckhorn mine in Washington, USA. Mill throughput at Paracatu was at 60% of capacity at year-end 2009 and was expected to reach design capacity during the first quarter of 2009.

Kinross’s average cost of sales per gold equivalent ounce is expected to be in the range of $390 to $420 in 2009. Material assumptions used for this forecast included a gold price of $750/oz; a silver price of $12.00/oz; an oil price of $75/bbl; and 2.10 Brazilian reals, 1.20 Canadian dollars, 28 Russian rubles, and 600 Chilean pesos to the U.S. dollar, respectively. Based on a preliminary review of fourth-quarter 2008 costs, Kinross expected its fullyear 2008 average cost of sales to be in the range of $425 to $445/gold equivalent oz.

Kinross is forecasting capital expenditures during 2009 of about $460 million, including about $145 million for growth projects, primarily for the Fort Knox project in Alaska, for Paracatu and for Cerro Casale in Chile; $57 million for pit development at Round Mountain in Nevada and La Coipa and Maricunga in Chile; $50 million for mine development at Crixas in Brazil, Kupol, and Buckhorn; $18 million for leach pad development at Round Mountain and Maricunga; $40 million for tailings dam work, primarily at Paracatu; and $150 million for sustaining capital expenditures.

As featured in Womp 09 Vol 01 -