Kinross Operations Had 61% Increase In Gold Production In Q3
TORONTO - Kinross Gold Corporation President and CEO, J. Paul Rollinson, said, “During the quarter, our operations increased production and lowered costs, primarily driven by higher grades at Paracatu, enhanced seasonal recoveries from our U.S.-based heap leaches, and the ramp-up at La Coipa, which progressed well and is expected to continue trending upwards with the mill averaging throughput levels of approximately 9,500 tonnes per day in October. Tasiast is on track to significantly increase production in the fourth quarter, with higher recoveries and increased throughput, which is expected to contribute to our strongest quarter of 2022.
We are excited about our pipeline of development and exploration projects, which all made strong progress during the quarter. At the world-class Great Bear project, drilling results continue to fulfill our expectations, including high-grade intercepts at depth, and we are on track to declare an initial mineral resource early next year.
The Company has returned approximately $300 million of capital to shareholders so far this year and expect to return a total of approximately $450 million by year-end through our share repurchase and dividend programs. Since launching our enhanced share buyback program in September, we have spent $180 million, effectively repurchasing for cancellation the shares that were issued as part of the Great Bear transaction while maintaining our quarterly dividend and investment-grade balance sheet.
During the quarter we continued to advance our ESG goals. On climate change and emissions reductions, we have completed an analysis of climate-related scenarios and their potential impacts on our future business, advanced our pipeline of energy-efficiency projects, and entered into strategic partnerships with various technology providers, suppliers and electric utilities.”
The Great Bear project in Red Lake, Ontario, continues to make excellent progress and the Company plans to declare an initial mineral resource estimate in early 2023. Drilling results continue to confirm Kinross’ vision of developing a large, long-life mining complex. The Tasiast 24k project is on schedule to reach 24,000 tonnes per day throughput in mid-2023. The Manh Choh project advanced well during the quarter with production expected in the second half of 2024.
Kinross produced 529,155 Au eq. oz. in Q3 2022 from continuing operations, a 61% increase compared with 328,409 Au eq. oz. in Q3 2021. The year-over-year increase was primarily attributable to higher production at Tasiast due to the temporary suspension of milling operations as a result of the mill fire in June 2021, at Paracatu due to an increase in grade and recovery, and at La Coipa due to the restart and mill ramp-up.
During the third quarter, revenue from continuing operations increased to $856.5 million, compared with $582.4 million during Q3 2021.
Paracatu, in Brazil, performed well during the quarter, increasing production significantly compared with Q2 2022 and Q3 2021 mainly as a result of higher grade and higher recoveries, with continued high-grade material expected for the remainder of the year driving a further increase in production. Cost of sales per ounce sold was lower quarter-over-quarter mainly due to the increase in production and higher year-over-year mainly due to inflationary pressure on consumables, contractors, labour and maintenance costs.
In Alaska, Fort Knox production was largely in line with Q2 2022, and increased compared with Q3 2021 primarily due to higher mill throughput. The site had another strong quarter of stacking onto the leach pad, and solution grades from heap leach processing are increasing, positioning Q4 to be another strong quarter. Cost of sales per ounce sold was in line quarter-over-quarter and increased year-over-year primarily due to inflationary pressure on consumables and higher contractor costs.
At Round Mountain in Nevada, production was higher than the previous quarter mainly due to more ounces recovered from the heap leach pads, and year-over-year production was largely in line. Cost of sales per ounce sold was lower quarter-over-quarter mainly due to higher production, and higher year-over-year related to inflationary cost pressures on consumables. The Company has completed the Round Mountain optimization program, which evaluated four primary options to exploit the significant resources at the site: Phase S open pit pushback, Phase W3 open pit pushback, Phase X underground, and Gold Hill underground.
Given the high levels of inflation experienced in Nevada, and the Company’s focus on capital discipline, cash flow generation, and resiliency, Kinross is prioritizing the underground opportunities at Phase X and Gold Hill, and continuing to mine Phase W (W1 and W2). The expansion opportunities at Phase W3 and Phase S have been deferred, and the associated ounces will remain in reserves and could potentially be exploited in the future as the environment improves. The two underground opportunities show potential for higher-margin, higher-return operations at Round Mountain compared to open pit, along with increased flexibility and optionality. A team with underground expertise has been assembled and the Company will be in position to start construction of an underground decline at Phase X next year.
At the Gold Hill exploration project, located approximately seven kilometers northeast of Round Mountain in Nevada, exploration drilling continued to return encouraging results. Drilling at the main zone (extension of the Gold Hill pit) has confirmed multiple >150m strike and dip extensions of the primary vein and parallel vein structures. Results received this quarter include: D-1175 – 2.5m @ 8.04 g/t Au (incl. 0.8m @ 23.3 g/t Au); and D-1173A – 2.3m @ 6.93 g/t Au (incl. 0.3m @ 36.90 g/t Au). Drilling along the parallel Alexandria vein (600m south of Main) has also returned encouraging results such as D-1176 – 1.9m @ 24.24g/t Au (Incl. 0.4m @ 107g/t Au), as well as visible gold in veins beneath the sinter (assays pending).
Gold Hill is a low sulfidation epithermal vein system consisting of high-grade narrow quartz veins with significant strike continuity. Historic underground mining (current pit area) produced approximately 40koz with a grade of 10g/t Au. Exploration this year focused on testing the strike and dip limits of Main and Alexandria, both of which remain open along strike. Exploration work will continue these efforts, as well as test for parallel veins outside of the two primary zones.
Bald Mountain, in Nevada, performed well during the quarter, with production increasing and cost of sales per ounce sold decreasing compared with Q2 2022. The quarter-over-quarter production increase was mainly due to more ounces recovered from the heap leach pads, partially offset by lower grades, while cost of sales per ounce was down mainly as a result of higher capitalized stripping. Year-over-year production was higher primarily due to more ounces recovered from the heap leach pads and, for the same time period, cost of sales per ounce sold was higher largely as a result of inflationary pressure on consumables.
The La Coipa in Chile reported that production increased significantly compared to the second quarter as the mill continued to ramp up and resolve commissioning challenges, and cost of sales per ounce sold were lower quarter-over-quarter mainly due to higher production. The pump and supply chain issues encountered earlier in the year have largely been resolved, with mill throughput steadily increasing month-over-month and October averaging approximately 9,500 tonnes per day (t/d) with multiple days at or above 13,000 t/d. The mill is now expected to steadily increase to a sustained design capacity of 13,000 t/d by the end of Q1 2023.
The Tasiast 24k project, in Mauritania, continues to progress on schedule to reach throughput of 24,000 t/d by mid-2023. Following project completion, it is expected that a ramp-up period will see 24,000 t/d plant throughput transitioning from an intermittent to consistent basis by the end of the year. Procurement is substantially complete, with all major equipment either on site or expected to arrive by year-end. Construction has commenced, and civil and concrete works are well advanced.
The 34MW Tasiast solar power plant continues to advance and is on schedule for completion in the second half of 2023. Engineering design is essentially complete and focused on deliverables for integration, procurement is well advanced with all long-lead critical procurement items ordered and site preparation started in October. The solar project is contributing to the Company’s efforts to reduce its greenhouse gas emissions and is expected to provide approximately 20% of the site’s power.
At the Great Bear project in Red Lake, Ontario, the Company continues to make excellent progress and is on schedule to declare an initial mineral resource in early 2023. The Company also plans to issue a Technical Report to support the resource. To date, Kinross has drilled approximately 160,000 meters and is on track to complete at least 200,000 meters of exploration and infill drilling in 2022 at the Limb and LP Fault zones. Since its last update on July 27, 2022, the Company has received additional assay results, with a selection of the new results from targets at the LP Fault zone. Drilling results continue to support the view of a high-grade, world-class deposit that underpins the prospect of a large, long-life mining complex. Results have also confirmed gold mineralization with good widths and high grades, including high-grade mineralization at depths of more than 500 meters. These results support the view that the LP Fault zone can support a long-life, high-grade, open-pit and underground mine. The initial results from the recently-completed 35,000 meter grade control drill program have also helped confirm the high grade, continuous nature of the intercepts observed in the LP Fault zone.
The Company is also analyzing an advanced exploration program that would establish an underground decline and allow for more efficient exploration of deeper areas of the LP Fault, along with the nearby Hinge and Limb gold zones, as well as bulk sampling. The Company is targeting a potential start of the advanced program as early as 2024.
Baseline environmental surveys, local community socio-economic studies and engineering activities required for the permitting process are progressing well. Kinross continues to advance its comprehensive local outreach and engagement program for all Red Lake regional communities, including the establishment of a community office. The Company is taking steps to build technical capacity and active site participation in the area of environmental monitoring with Wabauskang and Lac Seul First Nation partners, on whose traditional territories the project is located.
In July, the Company, as the operator of the joint venture, announced that it will proceed with development of the 70%-owned Manh Choh project in Alaska. The project is expected to increase the Company’s production profile in Alaska by a total of approximately 640,000 attributable Au eq. oz. over the life of mine at lower costs. Initial production from Manh Choh is expected in the second half of 2024.
Early works at Manh Choh are focused on camp and initial road access, which are proceeding on schedule and on budget. At Fort Knox foundation work for the processing infrastructure upgrades are underway. Permitting is progressing well and the Company received its wetland permit in the third quarter. Procurement and contracting activities are advancing well, prioritizing local employment and contracting, including with the Native Village of Tetlin.
Kinross continues to advance permitting activities at Lobo-Marte, in Chile, in order to preserve its optionality for Kinross’ long-term portfolio. The Company continues to study opportunities to extend La Coipa’s mine life up to the end of the decade, with the potential additions of a new Puren pushback, as well as the adjacent Coipa Norte and Can-Can pushbacks. Those extensions would enter into the regular permitting cycle in the upcoming years. As a result, the Company has decided to defer submission of the Lobo-Marte Environmental Impact Assessment (EIA), as the content of that application will depend, in part, on the extent of any mine life extensions at La Coipa and other factors such as gold price, local permitting process, and other economic considerations. The Company continues to believe in the project’s long-term development potential as a large, low-cost mine upon the conclusion of mining at La Coipa.
At the Curlew exploration project in Washington State, located approximately 35 kilometers north of the Company’s Kettle River mill by paved road, drilling from underground has confirmed the understanding of mineralized vein orientations. The Company is on schedule to declare a mineral resource in early 2023 with the drilling information to date. Underground exploration drilling is still underway and will continue into 2023 after which an updated resource will be presented at a later date as the project is expected to grow beyond the year-end resource. Exploration drill results received during the quarter include: Hole # 1116 – 2.4m @ 11.59 g/t Au – West Zone target; Hole # 1118– 2.9m @ 7.12 g/t Au – Stealth target; and Hole # 1120– 5.2m @ 5.37 g/t Au – LP target.