Kinross leads majors for investments in junior gold plays

After betting US$7.1 billion last fall on the expansion potential of Red Back’s Tasiast gold mine in Mauritania, Kinross Gold (k-t, kgc-n) chief executive Tye Burt told reporters his company’s buying spree had come to an end for a while. “We’ve got three great mines that we’re building over the next five years,” Burt explained to Bloomberg, “We don’t really need to make big acquisitions right now.”

Instead, Kinross’s plan for 2011 includes securing small, strategic interests in junior gold companies in order to leverage their exploration efforts into future growth. The Toronto-based gold miner has made or added to at least six such investments so far this year, several more than its main North American rivals, according to publicly disclosed documents. Goldcorp (g-t, gg), Iamgold (img-t, iag-n) and Newmont Mining (nem-n, nmc-t) all come next with three apiece, followed by Agnico-Eagle (aem-t, aem-n) and Yamana (yri-t, auy-n) with two, Eldorado Gold (eld-t, ego-n) with one and Barrick Gold (abx-t, abx-n) with nil.

All six of Kinross’s equity investments this year were in companies with fairly early-stage gold projects, the vast majority of which are located in the Americas. Several of these, in turn, are found in the Yukon, where Kinross spent $140 million in early 2010 to secure the highly prospective White Gold project from Underworld Resources in a purchase that sparked the territory’s latest gold rush.

In April, Kinross bought a 9.9% stake in project generator Tarsis Resources (tcc-v), which owns interests in 13 properties scattered throughout the Yukon as well as Mexico. According to its president, Marc Blythe, few companies exploring in the Yukon today are out there generating their own projects through staking, with most of them working on projects that have been known about for some time. Last year, Tarsis staked the prospective White River property in the western end of the Tintina gold province, about 390 km northwest of Whitehorse. The company is now focusing on completing follow-up soil sampling there in preparation for a small drill program there late in the year.

Kinross bought a similar 10% stake this spring in newly listed Colorado Resources (cxo-v), focused on gold in the Yukon and British Columbia. Colorado is exploring two early-stage properties: Oro, what it hopes will be a Carlin-type gold project located in the Macmillan Pass area of the Yukon, about 165 km northeast of Ross River; and Hit, an epithermal gold project just north of Princeton, B.C. The company has raised more than $16 million so far this year, and Kinross is not its only backer: Osisko Mining (osk-t) also recently acquired a minority stake in the junior.

As for riskier geopolitical districts, Kinross bought more shares of Edgewater Exploration (edw-v) this June, bringing its interest in the junior to about 12%. Edgewater is exploring two newly acquired projects, of which the Enchi gold property in southwestern Ghana is most pertinent to Kinross. Enchi covers 50 km of the prolific Bibiani Shear zone and is roughly 70 km southwest of the Chirano mine, formerly operated by Red Back Mining and now Kinross. Edgewater is earning a 51% interest in eight contiguous licences previously explored by Red Back, which identified 16 separate gold mineralized zones. Edgewater is also advancing its Corcoesto gold project in Spain, a more developed property said to have been first exploited by the Romans and more recently by two mining companies in the 1980s and 90s.

Heading further south, Kinross acquired a 9.9% stake this May in Solvista Gold (svv-v), a new Colombia-focused explorer. Solvista holds a 100% interest in two large properties in Colombia’s Antioquia department. The first, Caramanta, lies in the highly prospective and productive Middle Cauca gold belt, which many of the country’s hottest gold plays today. The second, Guadalupe, is nearer Medellin and has returned strong silver-gold values in what appears to be an epithermal setting.

Rounding out Kinross’s investments this year are two Ontario gold plays, Entourage Metals (emt-v) and Laurentian Goldfields (lgf-v). Kinross put $1 million into Entourage this May for an initial 6.9% interest.

Newly listed Entourage has begun drilling at a group of properties near Barrick’s Hemlo gold mine about 230 km east of Thunder Bay. Hoping to achieve what countless others have tried but failed to accomplish, the company is looking for another major gold deposit in the Schreiber-Hemlo greenstone belt, in which only the three closely spaced mines comprising Barrick’s Hemlo operations have been found to date. Entourage has persuaded Barrick’s former senior geologist at the mine, John Florek, into joining the hunt and has optioned several properties from Barrick nearly adjacent to and along strike of the Hemlo mines.

As for Laurentian, Kinross participated in a March private placement in order to keep its 4.6% equity interest in the junior from being diluted. The two companies have a joint venture agreement for the Goldpines North gold-arsenic-antimony project, near Red Lake, Ont., in which Kinross holds a 50% interest. Kinross is shelling out $1 million this year on a drill program for the project, with assays currently pending.