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Key Highlights of Kinross Gold’s Round Mountain Phase W Expansion

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Acquisition of 50% Round Mountain

In addition to announcing the go-ahead for Tasiast Phase Two, Kinross Gold (KGC) announced that it would proceed with Round Mountain Phase W. In November 2015, Kinross Gold acquired the remaining 50% of Round Mountain and 100% of Bald Mountain from Barrick Gold (ABX) in Nevada. 

By acquiring these assets, Kinross Gold diversified its geopolitical risk. Prior to this, a large part of its production was concentrated in Russia, which was a cause of concern for the investors.

Kinross’s peers (GDXJ) (GDX) Newmont Mining (NEM), Goldcorp (GG), and Agnico Eagle Mines (AEM) have relatively safer geopolitical risk profiles.

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Round Mountain Phase W

Round Mountain Phase W is expected to extend the mine life by five years and increase life-of-mine production by 1.5 million gold ounces. The feasibility study of this project considers:

  • a layback of the current pit
  • heap leach pad
  • additions to mining fleet
  • construction of a new Carbon in Column plant
  • relocation of some existing infrastructure

Key highlights

The key highlights for Round Mountain Phase W are as follows:

  • addition of 1.5 million ounces to the life of mine
  • an incremental internal rate of return of 13%
  • incremental net present value of $135 million at a gold price of $1,200 per ounce and an oil price of $55 per barrel
  • expected incremental cash flow of $265 million
  • extension of mine life by five years from 2020 to 2024

Kinross Gold expects the initial capital costs to reach $230 million, plus non-sustaining capitalized stripping of $215 million. Kinross expects to start stripping for Phase W in early 2018, pending the permitting process, which is proceeding on schedule. 

The construction and relocation of infrastructure are expected to finish by 2Q19, and KGC expects to encounter initial low grades in mid-2019.

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