Kinross Gold Shops for ‘Development-Stage’ Projects (Update1)
By Maria Kolesnikova and Rob Delaney
June 4 (Bloomberg) -- Kinross Gold Corp., Canada’s third- largest gold producer, is considering as many as 50 investments in all countries where the company has operations, including Russia.
Toronto-based Kinross wants to acquire “development- stage” or “active” projects, and is likely to take on local partners for any investments in Russia, Vice President James Crossland said in an interview today. The company’s producing assets are distributed evenly in the U.S., Russia and South America, and the company wants to maintain that geographical balance, Crossland said.
Kinross sold shares valued at $414.6 million in the first quarter to pay for acquisitions and take advantage of investors’ interest in gold as a haven from economic turmoil. Andrew Chaveriat, a New York-based analyst for BNP Paribas SA, said in a June 1 report that the metal may top $1,020 within a week or two.
“Our strategy is to take development-stage assets and bring them into production,” Crossland said in an interview at the St. Petersburg International Economic Forum. “We are open- minded about opportunities anywhere in the world because the gold is scarce to find, and there aren’t that many great deposits out there.”
A law regulating foreign ownership of Russia’s strategic mineral deposits makes it “wise” to have a local partner in the country, Crossland said. Some foreign companies have obtained clearance for such tie-ups, giving Kinross confidence to proceed, the company’s vice president said.
Kinross’s first-quarter profit rose 7.9 percent because of higher output and lower costs, and sales climbed 61 percent. The credit crisis and global recession have reduced costs for fuel and mining equipment, helping gold miners widen profit margins.
The crisis, which started with the collapse of the U.S. property market in 2007, has triggered more than $1.47 trillion of writedowns and credit losses at banks and other financial institutions, prompting the first global recession since World War II.
Gold futures for August delivery rose as much as $9.90, or 1 percent, to $975.50 an ounce today on the New York Mercantile Exchange’s Comex division.
Chile Project
Kinross rose 66 cents, or 3.1 percent, to C$21.85 at 10:30 a.m. on the Toronto Stock Exchange. The shares fell 5.8 percent this year before today.
Kinross and Barrick Gold Corp., the world’s largest gold producer, will conclude a study in the third quarter on their Cerro Casale deposit, Crossland said. Kinross assumed 50 percent control as part of its $3 billion acquisition of Bema Gold Corp. in 2007. Barrick owns the remainder.
Kinross Chief Executive Officer Tye Burt said in a May 6 interview that he’s more “positive” that Cerro Casale, estimated to cost $3.5 billion, will be developed because of higher prices for the metals. The companies will decide by the end of this year whether to develop the deposit, Burt said.
The Cerro Casale deposit has reserves of 23 million ounces of gold and 6 billion pounds of copper, Kinross said on its Web site.