Mining at the Refugio heap-leach gold operation, near Copiapo, Chile, is set to resume.
The mine is owned equally by
In 2003, a 56,000-metre drill program expanded reserves to justify a 25% increase in daily throughput. Initially, the Verde pits are scheduled to produce 40,000 tonnes of ore per day. This material will be crushed and placed on the leach pads. The new Pancho pit is expected to be mined at a rate of 35,000 tonnes per day and should extend the mine life to 10 years at an assumed gold price US$350 per oz. Life-of-mine gold production is expected to range from 230,000 to 260,000 oz. per year at a total cash cost of US$225 per oz.
“During its previous operating history, the Refugio mine consistently failed to meet expectations, due primarily to poor design and construction compounded by declining gold prices,” says Kinross President Robert Buchan. “We are particularly pleased, in this improved gold price environment, to be able to recommence operations with a substantial capital program to address the previous deficiencies, thereby allowing the operation to reach its true potential.”
Production will likely resume late in the fourth quarter of 2004 at an initial capital cost of US$71 million, part of which will be used to buy a new mining fleet. Also, a 110-km power line connected to the Chilean grid will replace the previous diesel-generated power. Kinross is evaluating various financing opportunities for its half of capital contributions.
At the base-case gold price of US$350 per oz., proven and probable reserves weigh in at 124 million tonnes averaging 0.86 gram gold per tonne, or 3.4 million contained ounces gold. The base-case project economics indicate a pretax internal rate of return of almost 22% and a payback of 3.8 years.
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