Improved Mill Grades At Fort Knox And Kettle River Buckhorn
TORONTO, ON - J. Paul Rollinson, CEO of Kinross, said, “In the current challenging environment, the company continues to deliver strong operating results. Our operations had another excellent quarter, and we remain on guidance for production, cost of sales, and all-in sustaining costs. Improved mill throughput at Fort Knox. Kettle River-Buckhorn and Fort Knox continued to achieve strong mill grades and recoveries. We also recorded a key milestone in Russia with the delivery of first ore from Dvoinoye to Kupol, and are on schedule to reach targeted production in the fourth quarter.
“We have intensified our strategic focus on margins, cost reduction and cash flow in response to the recent drop in gold price, and have taken additional measures to reduce overall spending and increase cash generation. We have identified new reductions in capital and exploration spending for 2013, which are expected to total approximately $180 million.”
The company second quarter 2013 production of 655,381 gold equivalent ounces, compared with 632,772 ounces in Q2 2012. The company’s revenue is $968.0 million, compared with $1,005.6 million in Q2 2012. The Company has undertaken a number of additional initiatives to reduce operating costs and capital expenditures, and maximize cash flow. Kinross has identified additional expected savings of approximately $180 million for the balance of 2013 and expects further savings this year.
First ore from development activities at Dvoinoye was delivered to Kupol in Q2 2013 and the Kupol plant upgrade has been successfully completed. The project remains on schedule to reach targeted production in Q4 2013.
In North America performance was strong in the second quarter, and the region remains on track to meet both production and production cost of sales guidance for the year. Regional production was higher compared with Q1 2013 due mainly to improved mill throughput at Fort Knox. Kettle River-Buckhorn and Fort Knox continued to achieve strong mill grades and recoveries during the quarter. Compared to Q2 2012, regional production was higher as a result of better mill grades at Fort Knox and Kettle River-Buckhorn.
In Russia second quarter production at Kupol was largely in line with Q1 2013, but was lower compared with Q2 2012 as a result of expected lower grades. Mill throughput was reduced during the quarter as a result of the planned shutdown from June 24 to July 6 to complete the mill expansion. Mill recoveries remained strong.
The region of South America remains on target to meet both production and production cost of sales guidance for the year. Paracatu’s production was in line with the previous quarter, as improved mill grade offset a slight decline in throughput. Maricunga’s decrease in production compared with Q1 2013 and Q2 2012 was the result of anticipated lower grades from transitional ore as the bottom of the current phase is mined. La Coipa’s production increased relative to Q2 2012 as a result of stronger grades, but relative to Q1 2013 experienced a slight drop, due to lower mill throughput and an unfavorable change in the gold/silver ratio. The Company expects to suspend mining of the existing ore body at La Coipa in the fourth quarter of 2013.
West Africa performance continued to be strong during the second quarter, and the region is on target to meet both production and production cost of sales guidance for the year. For the second consecutive quarter, Tasiast achieved its highest quarterly production level since being acquired by Kinross. The production increase was due mainly to expected higher grades entering the mill, along with improved performance from the dump leach. Chirano’s production decreased slightly compared to Q1 2013 and Q2 2012 as a result of expected lower grades.
During the second quarter, first ore (20,000 tons) from development activities at Dvoin-oye was delivered to Kupol, and the Kupol plant upgrade was successfully completed during the first week of the third quarter.
Underground development continued well ahead of schedule in the quarter, with 3,237 metres completed year-to-date. The mine is expected to start first stoping operations in Q3, and is expected to reach targeted production in Q4. Overall infrastructure construction progress is at 73% and the project remains on schedule and on budget.
Total exploration expenditures for the second quarter of 2013 were $32.9 million, including $30.9 million for expensed exploration and $2.0 million for capitalized exploration.
Kinross was active on 28 mine sites, near-mine and greenfield initiatives in the second quarter of 2013, with drilling across all projects totalling approximately 91,208 metres. At Tasiast, a total of 34,511 metres were drilled in Q2. Work continued on delineation of mineralization in quartz veins located along the Footwall Zone adjacent to the west side of the Piment central pit. The vein hosting structural corridor has been intersected in 15 drill holes (four of which were drilled in 2013) and appears to be developed over 500 strike metres. A further 10 holes are planned to follow-up positive intercepts.
Drilling resumed in the Tasiast Sud area testing targets located between five and ten kilometres south of West Branch. Exploration work followed up previous encouraging drill results below surface geochemical anomalies. Assay results are pending for most of the drilling completed in the quarter; however, encouraging results were returned at the C613 and Tamaya zones.
Encouraging drill results were returned from the Catalina target, where oxide mineralization has been identified 800 metres southeast of La Coipa Phase 7. Further drilling is underway to assess size and grade potential of this target.
At Moroshka, located four kilometres southeast of Kupol, most of the work focussed on delineating mineralization at the Main Vein and nearby targets. Confirmatory drilling at the Main Vein has been largely completed, with encouraging results. New drilling to the north and west of the Main Vein is testing for extensions of the existing vein and for parallel veins.