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An image of the Chulbatkan area in Russia
The Chulbatkan area in Russia
The Russia and Chile projects that Kinross Gold is advancing have the potential to significantly contribute to the Canadian miner’s future production, CEO Paul Rollinson said this week.

Taken together, Udinsk, in Russia, and Lobo-Marte, in Chile, can potentially add 6.7-million ounces to Kinross’ production profile over their lives and with the addition of three-million ounces of probable reserves at Udinsk, the projects represent 9.7-million ounces of gold.

“The projects are in jurisdictions in which we have deep experience and where we have operated effectively for many years. Udinsk can build on our extensive track record of success in Russia, and Lobo-Marte has the potential to be a cornerstone asset in a country with a long and successful history of mining,” said Rollinson.

The Udinsk prefeasibility study (PFS) reaffirmed Kinross’ view of the asset as a low-cost and high-return project, with estimated production increasing compared with initial scoping study forecasts. Udinsk is expected to produce two-million ounces of gold at an average all-in sustaining cost (AISC) of $580/oz during a seven-year mine life, which includes at least six years of mining and crushing activities plus an additional year of leaching on the heap leach pads.

The PFS plans for an openpit mine with a three-stage crush heap leach process flow.

Subject to a positive development decision and permitting, construction is expected to start with early work activities in late 2022.

The project has advanced to the feasibility-study stage, which would be completed next year after which a formal construction decision would be announced.

“We continue to expect that Udinsk will be the first mine on our Chulbatkan land package, and we are targeting first production in late 2025,” said Rollinson.

Executive VP and chief technical officer Paul Tomory said in a conference call that most of the Udinsk study outcomes were in line with the assumptions at the time of acquisition. Capital expenditure, however, increased by about $150-million and the increase was broken down as follows: one-third from inflation, another third from value-add decisions that have improved the net present value (NPV), for example a finer crush for better recovery, and a third from scoped changes, including earthworks and camp facilities.

The initial capital cost outlay for the proejct is now estimated to be $560-million, which includes about $50-million of prestripping in 2025.

Udinsk’s NPV is $210-million at a reserve price of $1 200/oz and the internal rate of return is 11%.

Turning to Lobo-Marte, in Chile, the feasibility study also reaffirmed the project’s key parameters. The mine would produce 4.7-million gold-equivalent ounces over its 16-year mine life at an AISC of $680/oz

Lobo-Marte, Rollinson said, offered long-term growth optionality as its potential next mine in Chile after La Coipa, which is about 50 km north-west of Lobo-Marte.

Project timing would be dependent on permitting and the conclusion of mining at the La Coipa project as the feasibility study plans to use water sources that are planned to be used by La Coipa.

The feasibility study estimates construction beginning in 2025 at the earliest with first production expected in 2027.