Kupol comes online

The week ended May 31, the 22nd trading week of 2008, was highlighted by a feat many said was too difficult to pull off.

• Succeeding where most fear to tread, Kinross Gold poured its first gold-silver dor from its new, world-class Kupol mine in the Chukotka region of Russia’s Far East. The mine is owned 75% by Kinross and 25% by the State Unitary enterprise of the Chukotsky Autonomous Okrug (Chukotsnab), with Kinross acquiring its interest via its takeover of Clive Johnson’s trailblazing junior Bema Gold.

Kinross’s share of Kupol’s 2008 production is expected to be about 365,000 to 390,000 gold-equivalent oz., at an average cost of sales of US$235-245 per oz.

Kinross is phasing in two more major developments later this year: the Paracatu expansion project in Brazil’s Minas Gerais state; and the Buckhorn project in Washington state in the U. S.

In 2009, the three new mines should help boost Kinross’s production to between 2.5 and 2.6 million gold-equivalent oz., while reducing the company’s costs per oz. The growing production profile achieved at a time when most majors are struggling to maintain gold output should elevate Kinross’s status as a player to be reckoned with in the gold industry.

• Toronto-based Iberian Minerals showed that it’s still possible for a junior to raise substantial funds despite the tight lending markets. The company has entered into a US$210-million multi-stage loan from Investec Bank (UK), BNP Paribas and Socit Gnrale, with funds earmarked for continued development of its reactivated Aguas Tenidas base metals mine in southwestern Spain.

Iberian subsidiary Compania Minera Condestable previously arranged a US$70-million pre-export finance facility, meaning that all the required financing to build the mine is now in place.

• TerraneMetalsanditswhollyownedMt. Milligancopper-gold project in central British Columbia got a big boost with majority shareholder Goldcorp backing development of the project in the form of a crucial loan guarantee and a revised joint-venture agreement.

Goldcorp will guarantee a $40-million credit line for Terrane underwritten by the Bank of Montreal so that the junior can buy equipment for an envisioned 60,000-tonne-per-day open-pit mine and processing plant at Mt. Milligan. Goldcorp can also convert its equity interest in Terrane into a participating interest in the project and possible operatorship.

The move marks a further departure for Goldcorp into base metals, and away from its past single focus on gold.

• Another B. C. mine had a watershed week, with Cross Lake Minerals reporting that underground mining and development was under way for the first time at its small QR gold mine in the Quesnel Trough, which had previously only produced feed from the open-pit Northwest zone. Ore from the newly accessible, underground Midwest zone will now be blended with Northwest ore in QR’s mill. The next source of ore will be the underground West zone, and the large, promising North zone continues to be explored.

Cross Lake bought the dormant mine from Kinross Gold in 2004, and poured its first gold last November.

• Our favourite exploration result of the week came from northeastern Ontario, with Kirkland Lake Gold reporting the highest-ever assay results from the Kirkland Lake camp, with new drilling into its South Mine Complex returning a 1-ft. interval in hole 53-1071 grading an uncut 344.4 oz. gold per ton (11,808 grams gold per tonne).

The company believes this latest intercept correlates with drill hole 53-1070, some 70 ft. to the west, which assayed 15.3 oz. gold over 2.3 ft. The new intercept is 150 ft. from existing mine infrastructure.

• For those keeping an eye on the big picture, there were some new, disturbing stats showing the depth of the U. S. real estate bust. Standard & Poor’s released its latest Case-Shiller home price index that showed a record 14.4% year-over-year decline in U. S. home prices in 20 key cities in March. The index only rose in Charleston,

N. C., and saw its steepest drops in Las Vegas, Miami and Phoenix. The index, created in 2001, has fallen every month since January 2007.

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