Phase S Leach Pad Expansion, Earthworks, Procurement, And Construction Activities All On Schedule
TORONTO - Kinross Gold Corporation CEO, J. Paul Rollinson, said, “We have had a strong start to the year and are well positioned to meet our annual guidance. Our portfolio of mines performed well, driven by strong operational performance, disciplined cost management and higher gold prices. The Company delivered a 20% increase in margins. As a result, free cash flow more than tripled over Q1 2023.
“With the strong sustained gold price, we will continue to prioritize our financial discipline and operational excellence. We will focus on maintaining our margins and cost profile, prudent capital allocation and debt reduction. Our development projects are all proceeding as planned. At Great Bear, in Canada, we made excellent progress on our 2024 drilling campaign, which continued to successfully target extensions of the resource at depth, and we remain on track to release a preliminary economic assessment (PEA) in the second half of the year. At Round Mountain, in Nevada, Phase S and Phase X are advancing well. We are also looking forward to first production at Manh Choh, in Alaska, early in the third quarter. At Tasiast, in Mauritania, our solar power plant is complete and generating power at full capacity.
“Kinross’ commitment to Sustainability is deeply rooted in our values and culture, and we are proud of our consistent high rankings in our industry. We are looking forward to publishing our 2023 Sustainability Report later this month, marking our 16th year of reporting in this important area.”
Kinross produced 527,399 Au eq. oz. in Q1 2024, compared with 466,022 Au eq. oz. in Q1 2023. The 13% year-over-year increase was primarily due to higher throughput at Tasiast, higher grades at La Coipa, and higher production at Bald Mountain, in Nevada, due to timing of ounces recovered from the heap leach pads. During the first quarter, revenue increased to $1,081.5 million, compared with $929.3 million during Q1 2023. The 16% year-over-year increase is primarily due to increases in gold equivalent ounces sold and average metal prices realized.
At Tasiast, production was in line with the previous quarter, and was higher year-over-year mainly due to record quarterly throughput following the completion of the Tasiast 24k project in the second half of 2023, partly offset by lower grades, as planned. Cost of sales per ounce sold was largely in line quarter-over-quarter, and lower year-over-year mainly due to the higher ounces sold.
Paracatu, in Brazil, delivered according to plan, with production largely in line with the previous quarter, and higher year-over-year mainly due to an increase in throughput, partly offset by lower grades as a result of planned mine sequencing. Cost of sales per ounce sold decreased quarter-over-quarter primarily due to lower maintenance, labour and contractor costs. Year-over-year, cost of sales per ounce sold increased mainly due to an increase in labour, drilling, blasting and fuel costs related to an increase in tonnes mined.
La Coipa, in Chile, reported that production was slightly lower than the previous quarter mainly as a result of a decrease in throughput, which was offset by higher grades and recoveries. Production increased compared with the same period last year primarily due to an increase in gold grades, and an increase in mill throughput. Cost of sales per ounce sold was largely in line with both comparable periods.
At Fort Knox the production was lower quarter-over-quarter due to lower mill grade, throughput and recovery, and the seasonal effect of fewer ounces recovered from the heap leach pads. Year-over-year, production was lower due to lower mill grade, throughput and recovery. In both comparable periods, cost of sales per ounce sold was higher primarily due to lower production. The Kinross-operated, 70%-owned Manh Choh project, the Company is on track for first production in early Q3 2024. Ore and waste mining are ongoing with the full mining fleet now in operation as planned. Following several months of orientation runs, transportation of ore to Fort Knox, where the ore will be processed, continues to ramp up with all contracted trucks received, the majority of the drivers onboarded, and trailer manufacturing now complete. Fort Knox mill modifications and site preparation remain on plan, including the completion of the ore delivery road and tie-ins for the pebble recycle conveyor. Building construction is advancing well, along with interior piping and electrical works.
Round Mountain performed well, with production increasing quarter-over-quarter due to higher mill throughput, grade, and recoveries, partially offset by fewer ounces recovered from the heap leach pads. The increase in production compared to Q1 2023 was primarily due to higher mill grade and throughput, partially offset by lower mill recovery and fewer ounces recovered from the heap leach pads. In both comparable periods, cost of sales per ounce sold was lower due to the increase in production as well as an increase in capital development related to the start of stripping Phase S.
The extension strategy at Round Mountain is advancing well. At Phase S, mining is on plan. For the heap leach pad expansion, earthworks began during the quarter, procurement is advancing as expected and construction activities remain on track. At Phase X, development of the exploration decline is progressing well, with over 1,800 metres developed to date. The decline has now progressed to the point that infill drilling of the primary Phase X target can commence in Q2 2024, as planned.
The Company also took the opportunity, as the decline was advancing, to perform exploration drilling in between the open pit and the underground target. This drilling has intersected high-grade mineralization with significant widths in this area outside of the primary Phase X target, which is also an area that did not have significant historic drilling: DX-0012: 8.4m @ 16.6 g/t Au Eq; DX-0019: 21.3m @ 9.9 g/t Au Eq; and DX-0014: 9.1m @ 9.5 g/t Au Eq.
Gold Hill reported that infill drilling of the underground targets is being completed from the bottom of the historical pit and exploration drilling is being completed from surface, testing continuity and extensions at depth and on strike.
At Bald Mountain, in Nevada, the production increased in both comparable periods mainly due to an increase in ounces recovered from the heap leach pads. Cost of sales per ounce sold was lower quarter-over-quarter mainly as a result of a higher proportion of capital development, and similarly, lower year-over-year due to a higher proportion of capital development as well as higher production.
The Great Bear project, the exploration program continues to make excellent progress, execution planning for the advanced exploration program is well underway, and permitting continues to advance on plan. The drilling results below (at true width) continue to support the view of a high-grade, long-life mining complex at Great Bear, with recent results showing extension of mineralization at depth across multiple zones.
At Yuma, results continue to intersect higher grade mineralization at depth in close proximity to the current resource, with holes BR-843AC3 and BR-695C1A intersecting 10.2m @ 18.59 g/t at 975m vertical depth and 6.2m @ 6.24 g/t at 1,085m vertical depth, respectively. At Yauro, BR-708AC1B intersected 2.0m @ 11.41 g/t at a vertical depth of 1,095m well below the current resources, showing the potential for Yauro to continue to expand at depth with high grade mineralization, similar to how depth extensions progressed with continued drilling at Yuma. At Auro, recent drilling also intersected high grade mineralization with a minable width below the current resources with hole BR-882 intersecting 6.1m @ 25.71 g/t at a vertical depth of 720m. At Discovery to the northwest, hole BR-847 has intersected 2.4m @ 5.53 g/t at 870m in the under-tested area beneath the current resource, demonstrating continuity of mineralization between previously reported drill holes. The 2024 drill program will continue to target mineralization below the existing mineral resource, explore for additional deposits along strike, and expand our Red Lake style mineralization at Hinge and Limb.
For the Advanced Exploration (AEX) program, Kinross is progressing provincial permitting, engineering, and execution planning activities that would establish an underground decline to obtain a bulk sample and allow for definition and infill drilling in the LP zone. Kinross has the necessary surface rights to develop the AEX project, subject to obtaining the required provincial permits. Detailed engineering, execution planning, and procurement continue to progress well. Some required infrastructure such as the camp and water treatment plant have now been purchased. Kinross is targeting a start of the surface construction for the AEX program in the second half of 2024, subject to receipt of permits, with start of the underground decline planned in mid-2025.
For the Main Project, Kinross continues to advance technical studies, including engineering and field test work campaigns. In the last quarter, substantial geotechnical field work was conducted to help de-risk project construction through strong early technical studies. Kinross remains on track to release a PEA in the second half of 2024. Kinross has opted to pursue a PEA as it enables the inclusion of a portion of the inferred underground resource. This provides visibility into the potential production scale, construction capital, all-in sustaining cost and margins for both the open pit and the underground. The PEA will only include a subset of the ounces in the measured, indicated, and inferred resources drilled to date. The Detailed Project Description for the Main Project was submitted to the Impact Assessment Agency of Canada in Q1 2024, as planned, and the Federal Impact Assessment is underway. Studies are ongoing and the Company expects to file its Impact Statement in the first half of 2025.
Kinross’ activities in Chile are currently focused on La Coipa and potential opportunities to extend its mine life. The Lobo-Marte project continues to provide optionality as a potential large, low-cost mine upon the conclusion of mining at La Coipa. While the Company focuses its technical resources on La Coipa, it will continue to engage and build relationships with communities related to Lobo-Marte and government stakeholders.
At Curlew, Kinross is working on optimizing the potential mine design with a focus on improving the efficiency and margin of potential underground mining. The Company continues to progress underground drilling to follow up on recent high-grade intersections at the Roadrunner and Stealth vein zones, and has intersected multiple zones of stockwork veining with assays pending.
Founded in 1993, Kinross Gold has a diverse portfolio of mines and projects in the United States, Canada, Brazil, Chile, and Mauritania.