Kinross acquiring Macassa mine

The annual gold output of Kinross Gold (TSE) is set to rise dramatically with the acquisition of the Macassa mine at Kirkland Lake, Ont., and the purchase of an additional interest in the Denton-Rawhide mine in Nevada.

Kinross has struck a deal with Barrick Gold (TSE) to acquire the long-producing Macassa mine for US$42.5 million and 2.5 million warrants (exercisable at $10 per share and with an expiry date of Oct. 31, 1997).

Macassa, which came into the Barrick fold with the takeover last year of Lac Minerals, has workings to 7,000 ft. The deposit remains open at depth.

The mining method at Macassa is in the process of being changed from predominantly cut-and-fill to long-hole mining with paste backfill. Production for 1995, during the transition phase, is scheduled to reach about 70,000 oz. In each of 1996 and 1997, the combined production from the mine and the nearby Lakeshore tailings retreatment plant is projected to be 95,000 oz.

Kinross expects currently high-direct operating costs to fall to below US$250 per oz. in 1996 and beyond.

Reserves at Macassa at the end of 1994 stood at 1.75 million tons grading 0.49 oz. gold per ton (including dilution). Kinross is confident of uncovering new reserves, including material at depth. Reserves at the Lakeshore tailings project were reported as 798,000 tons at 0.073 oz.

The transaction is subject to regulatory approval.

Meanwhile, Kinross has signed a letter of intent with Kiewit Rawhide Corp. to purchase the latter’s 24.9% interest in the Denton-Rawhide heap-leach mine for about 4 million shares of Kinross.

The purchase will give Kinross, which already has a 24% stake in the project, a 49% (48.9%) interest. The remaining 51% is owned by the operator, Kennecott Rawhide Mining, part of the Kennecott group of companies.

The mine, southeast of the town of Fallon, turns out more than 100,000 oz. gold and 900,000 silver per year.

The transaction is subject to the execution of a purchase and sale agreement and regulatory filings.