A particularly bad quarter for Kinross Gold‘s (K-T) Lupin gold mine in remote western Nunavut, 400 km northeast of Yellowknife is pushing the mine closer to final closure.
The company acquired a 100% stake in Lupin on Jan. 31, 2003, as a result of its combination with Echo Bay Mines (part of a three-way merger between the two companies and TVX Gold) but Kinross has never counted the Lupin as a “material property” its regulatory filings.
During the second quarter, Lupin produced 25,534 oz. gold at a total cash cost of US$409 per oz. For the five months ended June 30, the mine produced 44,318 oz. gold at a total cash cost of US$410 per oz.
Kinross did have some success in lowering operating costs at the mine, but these savings were overwhelmed by a 10% drop in tonnage mined, a 14% drop in grade and a rising Canadian loonie. As well, mine geologists are finding that gold mineralization at depth is not as continuous as once believed.
Last year, the mine produced 113,835 oz. gold at a total cash cost of US$330 per oz., and it cranked out 139,327 oz. at a cost of US$246 per oz. in 2001.
Kinross said that the costs in the recent quarter were “unacceptable” and that it was reviewing all options with respect to the mine’s future.
As of Dec. 31, 2002, Lupin held reserves of 1.2 million tonnes grading 8.57 grams gold (332,000 contained oz.) and no material in the resource category. The average cut-off grade range used was 5.5-8.3 grams gold, and the average process recovery was 93%.
Overall, Kinross posted a second-quarter loss of US$5.2 million, or US2 per share, compared with a $4.3-million loss (US5) in the same quarter last year.
Revenues between the two periods soared to US$157.8 million from US$59.2 million as a result of the three-way merger.
Also due to the merger, Kinross’s attributable second-quarter gold production rocketed to 470,177 oz. from 204,148 oz. a year earlier.
Kinross now ranks as Canada’s third-biggest gold miner and the world’s seventh-biggest.
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