Kinross Gold Corporation (TSX:K; NYSE:KGC) (“Kinross” or the
“Company”) today announced the results of a pre-feasibility study
(“PFS”) for its Lobo-Marte project in Chile.
Lobo-Marte offers the potential of a cornerstone
asset with attractive all-in sustaining costs1, 2 to enhance
Kinross’ long-term production profile. The project adds a
significant 6.4 million gold ounces, representing an approximately
25% increase, to the Company’s 2019 year-end mineral reserve
estimates in a favourable mining jurisdiction. The reserve addition
also increases Kinross’ reserve life index3 by approximately 2.5
years.
The PFS estimate includes total life of mine
production of approximately 4.5 million Au oz., average cost of
sales of $545 per Au oz.1, 2 and average all-in sustaining cost of
sales of $745 per Au oz.1, 2 during a 15-year mine life, which
includes 12 years of mining followed by three years of residual
processing. The project has attractive grades and a low estimated
strip ratio, in part due to historical stripping completed at the
Marte pit.
|
Lobo-Marte pre-feasibility study highlights |
Life of mine production (million Au oz.) |
4.5 |
|
Life of mine ore processed (million tonnes) |
147 |
|
Average grade processed (Au g/t) |
1.35 |
|
Strip ratio |
2.2 |
|
Average production cost of sales (per Au oz.)1, 2 |
$545 |
|
Average all-in sustaining costs (per Au oz.)1, 2 |
$745 |
|
Average recovery rate Au |
71% |
|
Average processing cost (per tonne) |
$9.85 |
|
Average mining cost (per tonne mined)4 |
$2.20 |
|
Life of mine average G&A costs (million per year) |
$30 |
|
|
|
|
The PFS contemplates an open pit, heap leach and
SART (Sulphidization, Acidification, Recycling and Thickening)
plant operation using rope conveyors and mining the Marte and Lobo
deposits in succession. Kinross has previously used SART technology
successfully in the region. Subject to a positive development
decision, the PFS estimates Lobo-Marte project construction
beginning in 2025, with first production expected in 2027.
Production would commence after the conclusion of mining at the
Company’s La Coipa project, which is located approximately 50
kilometres northwest of Lobo-Marte, and where the Company is
continuing to explore opportunities to extend mine life.
“The Lobo-Marte project provides Kinross with an
excellent, organic development option that has attractive all-in
sustaining costs and offers substantial upside leverage to the gold
price, without increasing project cost requirements and risk,” said
J. Paul Rollinson, Kinross President and CEO. “The project
represents a potential synergistic, long-term mine life extension
in a favourable mining jurisdiction and delivers a significant 6.4
million ounce addition to our current gold reserve estimates,
increasing the Company’s overall reserve mine life. As we move
forward with the feasibility study for this longer-term project, we
will continue to prioritize balance sheet strength and disciplined
capital allocation.”
The Company plans to commence a feasibility
study later this year, with scheduled completion in Q4 2021. The
feasibility study is expected to provide the detailed engineering
and project description required for permitting and submission of
an Environmental Impact Assessment.
Strong upside to gold
price
Lobo-Marte’s economics are leveraged to the
price of gold, as the PFS mine plan and estimated net present value
(NPV) and internal rate of return (IRR) at various gold prices are
based on pit designs using a $1,200/oz. gold price. Since the
project also assumes the same pit designs at higher gold prices,
the project is expected to realize upside value and increase
margins at higher gold prices without having to increase stripping
or cost estimates, thereby reducing risk and providing downside
protection.
|
Lobo-Marte IRR and NPV estimates based on pit
designs using $1,200/oz. gold
price* |
|
Kinross reserve
price$1,200/oz. |
Consensus long-term
price~$1,500/oz. |
Spot
price~$1,800/oz. |
IRR5 |
7% |
14% |
21% |
NPV6 |
$150 million |
$770 million |
$1,355 million |
*Key assumptions include: $1,200/oz. gold price,
$45/bbl oil price, 800 Chilean peso to the U.S. dollar, and
$2.40/lb copper price. |
The initial estimated capital cost for the
project is $765 million, plus approximately $230 million in
contingency. The estimated capital costs includes mine equipment,
crushing and storage facilities, conveyors, and site utilities and
infrastructure. Sustaining infrastructure costs are expected to
average approximately $30 million per year over the life of the
operation, while sustaining capitalized stripping costs are
expected to average approximately $45 million per year over 12
years of mining7.
|
|
Lobo-Marte initial capital cost estimates |
(millions) |
Mine equipment |
$100 |
Site development |
$205 |
Process facilities |
$210 |
Heap leach |
$70 |
Indirect and other |
$180 |
Sub-total |
$765 |
Contingency |
$230 |
Total |
$995 |
|
|
The go-forward decision on the project will
depend on a range of factors, including the gold price environment
and projections, expected economic returns, permitting, various
technical and other considerations, Kinross’ capital priorities,
and maintaining the Company’s balance sheet strength.
|
Lobo-Marte Mineral Reserve and Resource
estimates8(At June 30,
2020) |
|
Tonnes(kt) |
Grade(Au g/t) |
Ounces(Au koz) |
Probable Reserves |
146,771 |
1.36 |
6,394 |
Indicated Resources |
75,738 |
0.74 |
1,796 |
Inferred Resources |
9,637 |
0.67 |
207 |
|
|
|
|
About Kinross Gold Corporation
Kinross is a Canadian-based senior gold mining
company with mines and projects in the United States, Brazil,
Chile, Ghana, Mauritania, and Russia. Kinross maintains listings on
the Toronto Stock Exchange (symbol:K) and the New York Stock
Exchange (symbol:KGC).
Media Contact Louie DiazSenior
Director, Corporate Communicationsphone:
416-369-6469louie.diaz@kinross.com
Investor Relations ContactTom
Elliott
Senior Vice-President, Investor Relations and Corporate Development
phone:
416-365-3390
tom.elliott@kinross.com
Cautionary statement on forward-looking
information
All statements, other than statements of
historical fact, contained or incorporated by reference in this
news release including, but not limited to, any information as to
the future financial or operating performance of Kinross,
constitute “forward-looking information” or “forward-looking
statements” within the meaning of certain securities laws,
including the provisions of the Securities Act (Ontario) and the
provisions for “safe harbor” under the United States Private
Securities Litigation Reform Act of 1995 and are based on
expectations, estimates and projections as of the date of this news
release. Forward-looking statements include future events and
opportunities including, without limitation, statements with
respect to: our estimates, expectations, forecasts and guidance for
production, production costs of sales, all-in sustaining cost and
capital expenditures, cost savings, project economics (including
net present value and internal rates of return) and other
information contained in the feasibility study; as well as
references to other possible events, the future price of gold and
silver, the estimation of mineral reserves and mineral resources,
the realization of mineral reserve and mineral resource estimates,
the timing and amount of estimated future production, costs of
production, capital expenditures, costs and timing of the
development of the project and mining and processing activities,
permitting timelines, currency fluctuations, requirements for
additional capital, government regulation of mining operations, and
environmental risks. The words “contemplate”, “continue”,
“estimate”, “expect”, “feasibility”, “opportunity”, “option”,
“plan”, “potential” “schedule”, “study” and “upside” or variations
of or similar such words and phrases or statements that certain
actions, events or results “may”, “could”, “will” or “would” occur,
and similar expressions identify forward-looking statements.
Forward-looking statements are necessarily based upon a number of
estimates and assumptions that, while considered reasonable by
Kinross as of the date of such statements, are inherently subject
to significant business, economic and competitive uncertainties and
contingencies. The estimates, models and assumptions of Kinross
referenced, contained or incorporated by reference in this news
release, which may prove to be incorrect, include, but are not
limited to, the various assumptions set forth herein and in our
Annual Information Form dated March 30, 2020 and our full-year 2019
and first quarter 2020 Management’s Discussion and Analysis as well
as: (1) there being no significant disruptions affecting the
operations of the Company whether due to extreme weather events and
other or related natural disasters, labour disruptions, supply
disruptions, power disruptions, damage to equipment or otherwise;
(2) permitting, development, operations and production from the
Lobo-Marte project being consistent with the Company’s
expectations; (3) political and legal developments in any
jurisdiction in Chile being consistent with its current
expectations; (4) the exchange rate between the U.S. dollar and the
Chilean Peso being approximately consistent with current levels;
(5) certain price assumptions for gold and silver; (6) prices for
diesel, natural gas, fuel oil, electricity and other key supplies
being approximately consistent with current levels; (7) production
and cost of sales forecasts meeting expectations; (8) the accuracy
of the current mineral reserve and mineral resource estimates of
the Company; (9) labour and materials costs increasing on a basis
consistent with Kinross’ current expectations; and (10) asset
impairment (or reversal) potential, being consistent with the
Company’s current expectations. Known and unknown factors could
cause actual results to differ materially from those projected in
the forward-looking statements. These uncertainties and
contingencies can directly or indirectly affect, and could cause,
Kinross’ actual results to differ materially from those expressed
or implied in any forward-looking statements made by, or on behalf
of, Kinross, including but not limited to resulting in an
impairment charge on goodwill and/or assets. There can be no
assurance that forward-looking statements will prove to be
accurate, as actual results and future events could differ
materially from those anticipated in such statements.
Forward-looking statements are provided for the purpose of
providing information about management’s expectations and plans
relating to the future. All of the forward-looking statements made
in this news release are qualified by these cautionary statements
and those made in our other filings with the securities regulators
of Canada and the United States including, but not limited to, the
cautionary statements made in the "Risk Factors" section of our
Annual Information Form dated March 30, 2020 and the "Risk
Analysis" section of our full year 2019 and first quarter 2020
Management’s Discussion & Analysis. These factors are not
intended to represent a complete list of the factors that could
affect Kinross. Kinross disclaims any intention or obligation to
update or revise any forward-looking statements or to explain any
material difference between subsequent actual events and such
forward looking statements, except to the extent required by
applicable law.
Other information
Where we say “we”, “us”, “our”, the “Company”,
or “Kinross” in this news release, we mean Kinross Gold Corporation
and/or one or more or all of its subsidiaries, as may be
applicable. The technical information about Lobo-Marte contained in
this news release has been prepared under the supervision of and
verified by Mr. John Sims, an officer of the Company who is a
“qualified person” within the meaning of National Instrument
43-101.
Mineral Reserve and Resource Statements
notes
(1) Unless otherwise noted, the Company’s
mineral reserves are estimated using appropriate cut-off grades
based on an assumed gold price of $1,200 per ounce. Mineral
reserves are estimated using appropriate process recoveries,
operating costs and mine plans that are unique to each property and
include estimated allowances for dilution and mining recovery.
Mineral reserve estimates are reported in contained units. Mineral
resources are reported exclusive of mineral reserves.
(2) Unless otherwise noted, the Company’s
mineral resources are estimated using appropriate cut-off grades
based on a gold price of $1,400 per ounce. Foreign exchange rates
for estimating mineral resources were the same as for mineral
reserves.
(3) The Company’s mineral reserve and mineral
resource estimates as at June 30, 2020 are classified in accordance
with the Canadian Institute of Mining, Metallurgy and Petroleum
(“CIM”) “CIM Definition Standards - For Mineral Resources and
Mineral Reserves” adopted by the CIM Council (as amended, the “CIM
Definition Standards”) in accordance with the requirements of
National Instrument 43-101 “Standards of Disclosure for Mineral
Projects” (“NI 43-101”).
(4) Cautionary note to U.S. Investors concerning
estimates of mineral reserves and mineral resources. These
estimates have been prepared in accordance with the requirements of
Canadian securities laws, which differ from the requirements of
United States’ securities laws. The terms “mineral reserve”,
“proven mineral reserve”, “probable mineral reserve”, “mineral
resource”, “measured mineral resource”, “indicated mineral
resource” and “inferred mineral resource” are Canadian mining terms
as defined in accordance with NI 43-101 and the CIM Definition
Standards. These definitions differ materially from the definitions
in the United States Securities and Exchange Commission (“SEC”) SEC
Industry Guide 7 under the United States Securities Act of 1933, as
amended. Under SEC Industry Guide 7, a “final” or “bankable”
feasibility study is required to report mineral reserves, the
three-year historical average price is used in any mineral reserve
or cash flow analysis to designate mineral reserves and the primary
environmental analysis or report must be filed with the appropriate
governmental authority. In addition, the terms “mineral resource”,
“measured mineral resource”, “indicated mineral resource” and
“inferred mineral resource” are defined in NI 43-101 and recognized
by Canadian securities laws but are not defined terms under SEC
Industry Guide 7 and are normally not permitted to be used in
reports and registration statements filed with the SEC. U.S.
investors are cautioned not to assume that any part or all of
mineral deposits in these categories will ever be upgraded to SEC
Industry Guide 7 mineral reserves. “Inferred mineral resources”
have a great amount of uncertainty as to their existence, and great
uncertainty as to their economic and legal feasibility. It cannot
be assumed that all or any part of an “inferred mineral resource”
will ever by upgraded to a higher category. Under Canadian
securities laws, estimates of “inferred mineral resources” may not
form the basis of feasibility or pre-feasibility studies, except in
rare cases. U.S. investors are cautioned not to assume that all or
any part of an inferred mineral resource exists or is economically
or legally mineable.
The SEC has adopted amendments to its disclosure
rules to modernize the mineral property disclosure requirements for
issuers whose securities are registered with the SEC under the
Securities Exchange Act of 1934 (“Exchange Act”). These amendments
became effective February 25, 2019 (the “SEC Modernization Rules”)
and, following a two-year transition period, the SEC Modernization
Rules will replace the historical property disclosure requirements
for mining registrants that were included in SEC Industry Guide 7.
Following the transition period, as a foreign private issuer that
files its annual report on Form 40-F with the SEC pursuant to the
multi-jurisdictional disclosure system, the Company is not required
to provide disclosure on its mineral properties under the SEC
Modernization Rules and will continue to provide disclosure under
NI 43-101 and the CIM Definition Standards. If the Company ceases
to be a foreign private issuer or lose its eligibility to file its
annual report on Form 40-F pursuant to the multi-jurisdictional
disclosure system, then the Company will be subject to the SEC
Modernization Rules which differ from the requirements of NI 43-101
and the CIM Definition Standards. The SEC Modernization Rules
include the adoption of terms describing mineral reserves and
mineral resources that are “substantially similar” to the
corresponding terms under the CIM Definition Standards. As a result
of the adoption of the SEC Modernization Rules, the SEC now
recognizes estimates of “measured mineral resources”, “indicated
mineral resources” and “inferred mineral resources”. In addition,
the SEC has amended its definitions of “proven mineral reserves”
and “probable mineral reserves” to be “substantially similar” to
the corresponding CIM Definitions. U.S. investors are cautioned
that while the above terms are “substantially similar” to CIM
Definitions, there are differences in the definitions under the SEC
Modernization Rules and the CIM Definition Standards. Accordingly,
there is no assurance any mineral reserves or mineral resources
that the Company may report as “proven mineral reserves”, “probable
mineral reserves”, “measured mineral resources”, “indicated mineral
resources” and “inferred mineral resources” under NI 43-101 would
be the same had the Company prepared the reserve or resource
estimates under the standards adopted under the SEC Modernization
Rules. U.S. investors are also cautioned that while the SEC will
now recognize “measured mineral resources”, “indicated mineral
resources” and “inferred mineral resources”, investors should not
assume that any part or all of the mineralization in these
categories will ever be converted into a higher category of mineral
resources or into mineral reserves. Mineralization described using
these terms has a greater amount of uncertainty as to its existence
and feasibility than mineralization that has been characterized as
reserves. Accordingly, investors are cautioned not to assume that
any measured mineral resources, indicated mineral resources, or
inferred mineral resources that the Company reports are or will be
economically or legally mineable. Further, “inferred mineral
resources” have a greater amount of uncertainty as to their
existence and as to whether they can be mined legally or
economically. Therefore, U.S. investors are also cautioned not to
assume that all or any part of the “inferred mineral resources”
exist. Under Canadian securities laws, estimates of “inferred
mineral resources” may not form the basis of feasibility or
pre-feasibility studies, except in rare cases.
For the above reasons, the mineral reserve and
mineral resource estimates and related information in this
presentation may not be comparable to similar information made
public by U.S. companies subject to the reporting and disclosure
requirements under the United States federal securities laws and
the rules and regulations thereunder.
(5) The Company's mineral resource and mineral
reserve estimates were prepared under the supervision of and
verified by Mr. John Sims, an officer of Kinross, who is a
qualified person as defined by NI 43-101.
(6) The Company’s normal data verification
procedures have been used in collecting, compiling, interpreting
and processing the data used to estimate mineral reserves and
mineral resources. Independent data verification has not been
performed.
(7) Mineral resources that are not mineral
reserves do not have to demonstrate economic viability. Mineral
resources are subject to infill drilling, permitting, mine
planning, mining dilution and recovery losses, among other things,
to be converted into mineral reserves. Due to the uncertainty
associated with inferred mineral resources, it cannot be assumed
that all or any part of an inferred mineral resource will ever be
upgraded to indicated or measured mineral resources, including as a
result of continued exploration.
Source: Kinross Gold Corporation
1 Throughout this news release, estimated all-in
sustaining cost (per Au oz.) excludes corporate overhead costs.
This metric and production cost of sales (per Au oz.) are non-GAAP
measures and are not defined under International Financial
Reporting Standards. Refer to “Reconciliation of non-GAAP financial
measures” section in the Company’s Q1 2020 MD&A.
2 Production cost of sales and all-in sustaining cost of sales
figures are calculated with copper production applied as a
by-product credit (see footnote 8) and incorporates a 1.05% NSR
royalty (which is capped at $40 million) owned by Sandstorm Gold
Royalties.
3 Calculated as estimated 2019 proven and probable gold reserves
divided by 2019 gold production.
4 Average mining cost per tonne mined includes capitalized
stripping costs of $1.10 per tonne (approximately $45 million per
year).
5 Calculated from January 1, 2024.
6 Based on a 5% discount rate and calculated from January 1,
2024.7 Included in $2.20 per tonne mining cost.
8 For more information, see Mineral Reserve
and Resource Statements notes at page four of this news release.
The Lobo-Marte deposit also contains copper, and the PFS
contemplates life of mine copper sales of approximately 75 million
pounds based on a feed grade of 0.08% Cu and a recovery rate of
30%.
Kinross Gold (NYSE:KGC)
Historical Stock Chart
From Mar 2024 to Apr 2024
Kinross Gold (NYSE:KGC)
Historical Stock Chart
From Apr 2023 to Apr 2024