Kinross Gold takes writedown — US$24-m charge wipes out operating profit

An after-shock from the Macassa rock burst in April has registered on the books at Kinross Gold (K-T).

Although production has resumed on the upper levels of the mine, situated east of Kirkland Lake, Ont., the difficulties of mining at depth have forced the company to take a US$24-million writedown on the asset.

The series of rock bursts near the mine’s No. 3 shaft, around the 6,025-ft.

level, caused underground work to be suspended until early June. Production has still not resumed from the deeper levels of

the mine.

In the first half of 1997, Macassa produced 23,301 oz. gold, or about half of what it produced in the first half of last year. As production was cut in half, cash costs almost doubled to US$433 per oz.

A loading pocket, now being installed at the 5,150-ft. level, is expected to be finished before the end of September, allowing more efficient production from the mine’s upper levels, and Kinross now estimates the mine will produce 32,000 oz. in the second half of the year at a cash cost of around US$275 per oz.

Kinross’s average cash costs were also higher, averaging US$280 per oz. for the first six months of the year. Increased depreciation and amortization costs contributed to an increase in total production costs (cash costs plus unit capital costs) to US$364 per oz., compared with US$337 in the same period of 1996.

The company posted a loss of US$25.6 million in the first half of 1997, compared with earnings of US$4.9 million a year earlier.