Kinross gives Tsokol thumbs-down (January 25, 2005)

Kinross Gold (K-T) has cancelled a plan to develop the Tsokol gold deposit, near its Kubaka mine in far eastern Russia, placing Kubaka’s future in doubt.

Tsokol, which has an inferred resource of 587,000 tonnes grading 10.5 grams gold per tonne, had been expected to be developed following the Kubaka open pit was mined out in 2002. Development would have been phased in after depletion of three small underground resources at Kubaka and after the Birkachan open pit was completed.

Ore stockpiles from the Kubaka pit, the underground resources at Kubaka, and the Birkachan pit are expected to keep the Kubaka mill fed for about a year. An underground resource at Birkachan — 1.5 million tonnes grading 12.1 grams gold per tonne, all in the inferred category — is still under consideration for development.

Kinross said in a disclosure announcement that Tsokol did not meet its rate-of-return criteria, but that an “unpredictable tax climate” had militated against developing the deposit. Press reports had suggested that the local government in Magadan had become increasingly hostile to Kinross, but the company denied that government relations were a factor in its decision.