TORONTO — Kinross Gold Corp. says it intends to rely mainly on internally generated opportunities to continue to produce an average of 2.5 million gold equivalent ounces per year over the next decade.
In a news release and conference call on Tuesday, the Toronto-based miner didn’t directly acknowledge a media report from last week suggesting may sell its operations in the Americas to concentrate on its Russian and West African mines.
But CEO Paul Rollinson told analysts during the call that he is pleased with company’s existing portfolio of projects as well as Kinross’s size, which he said is big enough to support an internal team of technical experts.
He said he doesn’t “see a lot of upside in debating the rumour of the week,” while dismissing the idea of selling Kinross’s mines in North and South America, which produced 1.41 million gold equivalent ounces in 2019.
“We’re focused on the portfolio and making it the best it can be and we don’t feel under any pressure as it relates to (mergers and acquisitions),” he said.
In September, Kinross said it expects to increase production to 2.4 million ounces in 2021, 2.7 million in 2022 and 2.9 million in 2023.
A presentation posted Tuesday shows output from existing mines falling from 2024 through 2029 but being replaced by new production from as-yet-unsanctioned growth projects in Russia, the United States and Chile, as well as potential projects in those countries and West Africa.
“Initially, the rise to 2.9 million gold equivalent ounces by 2023 appears to not be sustainable, but … there exists a multitude of opportunities within the existing portfolio to keep production elevated over the longer term,” pointed out National Bank analyst Mike Parkin in a report.
Despite recent record high gold prices above US$2,000 per ounce, the company won’t approve major projects unless they are expected to be profitable at US$1,200 per ounce, chief technical officer Paul Tomory said on the call.
“We continue to do our planning at US$1,200,” he said. “Our primary focus is moving what are currently US$1,400 resources into a US$1,200 reserve.”
Kinross is working to improve the economics of its current list of potential projects by leveraging its past investments, driving down costs and finding ways to produce more gold with the same money, he said.
Last month, Kinross announced it would buy a controlling interest in the open pit Peak Gold project in Alaska. It plans to crush the ore there and transport it by truck 400 kilometres to the northwest to its existing Fort Knox mine, thus extending the life of the existing mill and infrastructure.
On the call, Rollinson said the same model could be used if other small mine prospects in Alaska are purchased. Tomory added the company has also considered using barges to transport ore on Alaskan rivers to Fort Knox.
Kinross is expected to pay its first dividend in seven years this week after reinstating it last month in view of its growing gold production and higher gold prices.
By Dan Healing in Calgary
This report by The Canadian Press was first published Oct. 20, 2020.
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