Pit slide, rain limit Fort Knox gold output

Kinross Gold Corp. Nov. 7 reported lower gold production and higher costs at its Fort Knox Mine due to lower ore grades and the minor pit wall slide that occurred at this Interior Alaska operation in March and above average rainfall which affected geotechnical stability during the third quarter.

Fort Knox produced 51,984 ounces of gold during the third quarter of 2018, a roughly 49 percent decrease from the 101,047 oz recovered during the same period last year.

The per-ounce cost of Fort Knox gold sold during the quarter was US$1,015, a 58 increase over the US$641 production cost of sales during the same period last year.

The mill processed 2.72 million metric tons of ore averaging 0.42 grams per metric ton gold during the quarter, compared to 7.49 million metric tons averaging 0.78 g/t last year.

Additionally, 3.26 million metric tons of ore averaging 0.19 g/t gold was processed on the heap leach pad, compared to 6.09 million metric tons averaging 0.26 g/t during the third quarter of 2017.

Kinross said the pit wall slide at Fort Knox is limiting the areas of the pit that can be accessed, which is the reason for the lower grade ore being fed into the mill.

"While the size of the slide is relatively small, its location is restricting access to higher grade material," Kinross Gold COO Lauren Roberts informed shareholders and analysts on Nov. 8.

Roberts said an unseasonable amount of rain in the area created addition geotechnical and operational challenges at Fort Knox.

Through the first nine months of 2018, Fort Knox produced 203,375 oz of gold at $810/oz sold, compared to 285,933 oz at US$631/oz sold through the end of September 2017.

"At Fort Knox, the pit wall slide that occurred in late March has impacted production and costs, a challenge that we are continuing to work through," said Kinross Gold President and CEO Paul Rollinson.

Kinross said the lower gold output at Fort Knox is expected to continue into the fourth quarter.

Gilmore on schedule

While 2018 gold production at Fort Knox is on pace to be the slowest since 2009 and potentially since the mine went into production in 1996, the future of this iconic operation a few miles north of Fairbanks looks bright.

In June, Kinross announced plans to develop Gilmore, an expansion project that is expected to extend the life of the Fort Knox Mine.

During a Nov. 8 presentation at the Alaska Miners Association annual convention in Anchorage, Jeremy Brans, Kinross' new general manager at Fort Knox Mine, said the Gilmore project is really a westward expansion of the current open-pit.

Lying immediately west of the Fort Knox pit, which has produced roughly 7.5 million oz of gold over the past 22 years, Gilmore is expected to add roughly 1.5 million oz of gold to the Fairbanks-area operation and extend mining by six years to 2027 and gold recovery from heap leaching to 2030.

Kinross management views these initial phases of the Gilmore project as a bridge to further extensions to the Fort Knox operation.

"This presents a lot of opportunity to keep the drills going, to keep exploring," Brans said.

The Fort Knox manager said the orebody that has been mined for the last 22 years remains open in several directions, especially to the east and west, and much of the future extensions are expected to come from further expansions of the Fort Knox-Gilmore pit.

Other prospects across the wider Fort Knox property, such as the Gil-Sourdough deposit, provide added opportunities to extend gold production at Fort Knox further into the 21st Century.

According to the most recent calculation, Gil hosts 29.5 million metric tons of indicated resource averaging 0.56 g/t (533,000) oz. of gold.

Kinross said it is evaluating potential synergies between Gil and ongoing operations at Fort Knox.

In the meantime, crews at Fort Knox continue to advance Gilmore on schedule and on budget, with initial production expected in early 2020.

In its third quarter report, Kinross said preparations for major construction of the Barnes Creek Heap Leach Pad, which is being constructed to accommodate much of the ore from Gilmore, is proceeding well and the company expects to begin stripping the waste of the orebody at Gilmore in mid-2019.

–SHANE LASLEY