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Can Kinross Gold Sustain Its Price Momentum after 3Q17 Results?

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Part 3
Can Kinross Gold Sustain Its Price Momentum after 3Q17 Results? PART 3 OF 7

These Projects Could Drive Kinross Gold’s Production Growth

Bald Mountain and Round Mountain

Kinross Gold’s (KGC) management is trying to realize the full potential of Bald Mountain and Round Mountain. Engineering is 70% complete at the Vantage Complex at Bald Mountain. The permit process is going as planned, and initial construction work is expected to start in 1Q18.

These Projects Could Drive Kinross Gold’s Production Growth

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For Round Mountain Phase W, the stripping and initial construction work is expected to start in early 2018, subject to completion of the permit process. Detailed engineering works are continuing. Initial low-grade Phase W ore is expected in mid-2019.

You may remember that KGC gave the go-ahead to Round Mountain Phase W in September 2017.

Tasiast expansion

Kinross Gold’s management maintained during its latest earnings call that the Phase One expansion of its Tasiast mine is progressing well and is on time and on budget. The company is expecting to start full commercial production toward the end of 2Q18. The construction of the plant is 77% complete.

Production growth

Kinross Gold decided to do the Tasiast expansion in two phases in order to lower the risks. In September 2017, Kinross announced it will go ahead with the Tasiast Phase Two Expansion as well. This phase is expected to increase the mill capacity to 30,000 tons per day. During its 3Q17 earnings release, KGC maintained that construction for Phase Two is scheduled to begin in early 2018. The company has already started the procurement for long lead times, including the power plant. The expected free cash flow generation from this project is expected to be ~$2.2 billion over the life of the mine.

Kinross’s decision to proceed with Tasiast Phase Two and Round Mountain Phase W could help its multiple rerate as investor concerns regarding a decline in future production could be eliminated.

Among its peers (GDX), Agnico Eagle Mines (AEM), Goldcorp (GG), Eldorado Gold (EGO), and Newmont Mining (NEM) have strong growth project pipelines.

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