Sept 18 (Reuters) - Kinross Gold Corp said it plans to expand two gold mines, including the second phase of its Tasiast operation in West Africa, spending more than $1 billion to boost output and lower costs.
The Phase 2 expansion at Tasiast in Mauritania, which would have an initial capital cost of $590 million, will raise the mine’s mill capacity to 30,000 tonnes per day from 12,000 tonnes, said Kinross, the world’s fifth biggest gold producer by output.
That would lift average annual gold production at Tasiast to 812,000 ounces at an all-in sustaining cost of $655 an ounce.
The Toronto-based miner said it will spend another $445 million to add five years of production to its Round Mountain mine in Nevada, currently scheduled to end in 2022. That project will add 1.5 million ounces of gold reserves.
Kinross plans to finance both projects with existing liquidity and operating cash flows.
The Tasiast expansion is relatively low risk, said TD Securities analyst Greg Barnes in a Sept. 14 note to clients, reflecting the miner’s seven years of operations in the country.
A first-phase expansion is on track for commercial production in the second quarter of 2018.
Construction on Phase 2 is expected to begin in early 2018 with commercial production expected to start in the third quarter of 2020.
Kinross acquired Tasiast in 2010 through its $7.1 billion purchase of Australia’s Red Back Mining at the peak of an industry acquisition spree. It later wrote down virtually the entire price of the acquisition, costing former Kinross CEO Tye Burt his job.
Last year, the miner launched a $730 million expansion at Tasiast but opted for a less-risky two-phase approach in the wake of gold prices slumping 30 percent since 2011.
The first expansion, announced in March last year, was expected to increase daily mill capacity to 12,000 tonnes per day from 8,000. (bit.ly/2xrUlv8) (Reporting by Kanishka Singh in Bengaluru, Susan Taylor in Toronto and Nicole Mordant in Vancouver; Editing by Gopakumar Warrier)