Refugio’s fate in doubt as losses mount

Despite the best efforts of partners Kinross Gold (K-T) and Bema Gold (BGO-T), the Refugio mine in Chile’s Maricunga district seems unable to turn a profit in today’s brutal price environment.

Representatives of both companies will meet shortly to review “various options” for the equally owned operation, which, in the quarter ended Sept. 30, turned out a disappointing 16,469 oz. gold-equivalent at total cash costs of US$320 per oz.

Refugio’s red ink spilled over on to Kinross, which posted a net loss of US$14.3 million (or 6 per share) in the quarter, up from US$11.4 million a year earlier. The company’s loss for the first nine months of 2000 came in at US$32.9 million (or 13 per share), compared with a loss of US$36.1 million a year earlier.

Kinross reported attributable gold-equivalent production of 227,594 oz. during the latest quarter, down from 228,086 oz. a year ago. However, cash costs fell to US$201 from US$212 per oz., helped by spending decreases at the Hoyle Pond mine in Canada, Kubaka in Russia, and Refugio. Total production costs came in at US$303 per oz., down US$2 from a year ago.

For the 9-month period, the company’s attributable gold-equivalent production was 689,172 oz., compared with 759,642 oz. a year earlier. The company expects its cash costs to fall to less than US$195 per oz. in the last quarter of 2000, owing to operating improvements at the Fort Knox mine in Alaska.

In the latest quarter, Fort Knox produced 88,838 oz. gold at a cash cost of US$206 per oz., while Hoyle Pond turned out 35,298 oz. at US$187 per oz. The company’s share of production from the 54.7%-owned Kubaka mine was 61,629 oz. at US$159 per oz. gold-equivalent.

At the end of September, Kinross had US$86.4 million of cash and US$7.2 million in working capital, for total working capital of US$93.6 million.