GOLD NEWS

Kinross Gold board approves $370m Dvoinoye gold-silver project

Kinross' gold equivalent ounce production dropped 6% in the first quarter, but Kinross officials are standing pat on their 2012 guidance of 2.6 million to 2.8 million GEO.

RENO (MINEWEB) - 

Kinross produced 604,247 attributable gold ounces in the first quarter, a 6% drop over the first quarter of 2011, mainly due to below plan production at Tasiast, a scheduled decline in grade at Kupol, and a planned increase in processing lower-grade stockpile ore at La Coipa.

Nevertheless, Kinross said it expects a production increase during the second half of the year in the North American, South American and West African regions.

In financials released Tuesday, Kinross CEO Tye Burt said, "At Tasiast, mining activity has accelerated, infrastructure construction and permitting remain on plan, and we are making progress towards selecting an optimum processing approach for a further expansion. Our exploration focus has shifted from infill drilling to step-out and district targets along the 75-kilometer land position."

Burt also noted the Kinross board has approved full construction funding for the Dvoinoye project, which is expected to deliver its first ore to the Kupol mill in the second half of 2013. Production at Kupol was lower during the first quarter due to reduced gold and silver head grades of the mine as operations moved out of the depleted high grade areas.

Total life of mine gold production at Dvoinoye is expected to be 1.1 million ounces of gold and 1.14 million ounces of silver. Annual gold equivalent production is expected to average 215,000 to 250,000 ounces for the first full three years of production. Capex is estimated to be US$370 million.

Meanwhile, Kinross is also continuing negotiations with the Ecuadorean government on an improved economic package to develop the Fruta del Norte project. Burt said the company is "exploring opportunities to improve project economics at FDN as part of our optimization process."

The company reported 611,838 gold equivalent ounces of production during the first quarter, down from 700,479 ounces of GEO during the same period of 2011. Kinross reiterated that it expects to produce 2.6 million to 2.8 million gold equivalent ounces this year at a production cost of sales per GEO ranging from $670 to $715 for 2012.

FINANCIALS

Kinross reported adjusted net earnings of $203.1 million or 18-cents per share during the first quarter of 2012, up from $175.3 million or 15-cents per share in adjusted net earnings reported in first-quarter 2011.

Net earnings were reported at $105.7 million or 9-cents per share during the first quarter of this year, down from net earnings of $250.1 million or 22-cents per share reported during the first-quarter 2011. Reported 1Q12 net earnings were affected by $110.3 million in tax liability as the result in the Ghanaian corporate income tax rate from 25% to 35%.