Kinross buoyed by Fort Knox, Russia projects

Buoyed by the purchase of Bema Gold, Toronto-based Kinross is also happy with the performance of the Fort Knox mine near Fairbanks. Even a seep from the tailings dam that could potentially have damaged that mine's near-pristine environmental record can be viewed as a successful example of protective measures being put into action. In the first quarter of 2007, Kinross reported net earnings of $68.5 million, compared to net earnings of $8.9 million in the same period last year. Gold production was up 7 percent compared with the first quarter of 2006.

"Our last four quarters at Kinross have been the best in the company's history," Kinross President and CEO Tye Burt said May 7. "Kinross generated excellent revenues, cash flow and earnings in the first quarter of 2007. I am especially proud of the efforts of our team in controlling costs." Burt took the helm at Kinross in the spring of 2005, when the company was mired in accounting problems and its share price was around $7.50. Since then it has climbed steadily and is currently about $14.70.

Kinross completed the $2.9 billion acquisition of Bema Feb. 27, giving the company a 90 percent interest in the Julietta mine in Russia's Magadan region, a 75 percent interest in the Kupol gold-silver project in Chukotka - across the Bering Strait from Alaska - and part ownership of a mine and a development project in Chile. Kupol is under construction and is approximately 60 percent complete, according to Kinross. All equipment and supplies for the 2007 season have been transported to the site via winter road, including all four electrical generators required to run the mill.

In light of industry-wide cost pressures, Kinross expects that the total capital cost for Kupol will exceed the $599 million budget by approximately 10-15 percent. The Russian Federal Forestry Agency and the Ministry of Natural Resources have approved a reclassification of the Kupol project lands from forestry to industrial lands. Kinross is now working with local authorities to complete registration of the reclassified lands and to enter into a longer-term lease with those authorities.

Fort Knox production up

In the first quarter of 2007 Fort Knox produced 82,714 ounces of gold, up from 79,677 ounces in the same period last year. The mine recently spent approximately $2.5 million expanding its seepage interception and monitoring systems after a small seep occurred last December in the south abutment of the tailings dam. The seep of about 10 gallons per minute was identified by mine personnel during their normal daily inspections and was self-reported to both the Alaska Department of Environmental Conservation and the Department of Natural Resources.

All seepage water was pumped back into the tailings impoundment facility using the originally designed seepage collection system that was implemented with the initial dam construction. There was no evidence of a release to the environment in either surface water or ground water, based on extensive daily sampling conducted after the seep was discovered. "Really all of our systems were working," Lorna Shaw, Fort Knox's spokeswoman, told Mining News. "Our environmental record is something that we're very proud of, and this just strengthens that record."

Fort Knox is expecting to receive permits within the next few weeks for a 161 million-ton capacity heap leach pad within the Walter Creek drainage, above the existing tailings storage facility, Shaw said. Ore for the heap leach will consist of run-of-mine rock from the Fort Knox pit and various stockpiles. Currently the Barnes Creek and Fish Creek stockpiles contain 29 million tons of lower grade ore, which will be heap leached. The ore is characterized by relatively high permeability that will promote solution flow and drainage for rapid rinsing at closure, according to Fort Knox's 2006 annual activity report.