Canadian miner Kinross Gold is set to go ahead with the first phase expansion of its Tasiast mine in Mauritania in North Africa.
Kinross, the fifth biggest gold producer in the world, will spend an estimated $300m on the first phase expansion of the mine. Overall, it will spend $920m on the two phases of expansion.
The first phase expansion is projected to increase the mill throughput capacity from 8,000t per day to 12,000tper day. It is estimated to reach full production by the end of first quarter of 2018.
Kinross president and CEO J. Paul Rollinson said: "This phased approach allows Kinross to transform Tasiast into a lower cost, cash flow positive operation in the near term while preserving the operation’s significant growth potential.
"Phase One, which is expected to reach full production by the end of Q1 2018, will require an estimated initial capital investment of approximately $300m, to be self-financed by the Company.
"The expansion is forecast to reduce Tasiast’s production cost of sales per ounce by an estimated 48% while increasing annual production by an estimated 87% compared with 2015.
"The Phase One expansion has robust standalone economics, including a positive 20% expected internal rate of return."
Kinross expects its existing cash balances will be sufficient to fund the first phase expansion. As a result of its expansion plans, the company has revised its estimate of capital expenditure for 2016 to $755m from $595m announced last month.
After the completion of second phase, the combined mill throughput is expected to reach nearly 30,000t per day.
In 2014, the company had estimated the total capital expenditure on the expansion at $1.6bn. Later, in February 2015, it was not proceeding with the expansion of Tasiast due to a sharp decline in gold prices.
Rollinson said: "Phase Two, which anticipates increasing total throughput to 30,000 t/d, underscores Kinross’ focus on financial discipline. The forecast total capital expenditure for the combined Phase One and Two has been significantly lowered compared to previous expansion studies.
"With lower capital required, the expected benefits remain compelling, with a 30,000 t/d Tasiast expected to be the Company’s largest and lowest cost operation with a long estimated mine life."
The expansion of the mill at Tasiast remains crucial for Kinross’ growth prospects. The company acquired in Tasiast mine in 2010 when it took over Australia’s Red Back Mining.