Kinross leads majors for investments in junior gold plays

After betting US$7.1 billion last year on the expansion potential of Red Back Mining’s Tasiast gold mine in Mauritania, Kinross Gold‘s (K-T, KGC-N) chief executive Tye Burt has said his company’s buying spree has come to an end for a while. 

Instead, Kinross’s plan for 2011 includes securing small 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, which is several more than its main North American rivals. Goldcorp (G-T, GG-N), Iamgold (IMG-T, IAG-N) and Newmont Mining (NEM-N, NMC-T) all come next with three apiece, followed by Agnico-Eagle Mines (AEM-T, AEM-N) and Yamana Gold (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’ equity investments this year are in companies with early-stage gold projects, the majority of which are located in the Americas. Several of these, in turn, are 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 stoked the territory’s latest gold rush. The company bought its initial 10% interest in Underworld in an October 2008 private placement.

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 generate their own projects through staking, with most of them working on projects that have been known for some time. Last year, Tarsis staked the prospective White River property in the western end of the Tintina gold province 390 km northwest of Whitehorse. The company is now focusing on completing follow-up soil sampling there in preparation for a small drill program late in the year.

Kinross bought a similar 10% stake this spring in newly listed Colorado Resources (CXO-V), looking for gold in the Yukon and B.C. 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, 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.

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 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 1990s.

Back in the Americas, 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, in which many of the country’s hottest gold plays are found. The second, Guadalupe, is near
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 newly-listed Entourage this May for an initial 6.9% interest. Entourage has begun drilling at a group of properties near Barrick’s Hemlo gold mine near Marathon, Ont. 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 beside 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 the first round of assay results pending.