Kinross aims to pull trigger on more deals

1 of 1Full Size

By Cameron French

TORONTO (Reuters) - Kinross Gold (K.TO) plans to seek out more acquisitions, the company's chief executive said on Wednesday, citing an "unprecedented" opportunity to bulk up due to the financial crisis and the rout of small players on stock markets.

Canada's No. 3 gold miner has added to its resources with the recent acquisitions of the Lobo-Marte property in Chile and the Fruta del Norte project in Ecuador, the latter through its takeover of Aurelian Resources. It is also boosting its cash position with a $360.5 million stock offering announced on Wednesday.

"We're not going to hesitate to pull the trigger when we see the right deal," Kinross CEO Tye Burt said in an interview.

"It is a time of unprecedented opportunity."

While share prices of larger gold miners such as Kinross have strengthened over the past few months, smaller miners have remained under pressure due to tough financing conditions that have put some of them on life support and made it tough for others to bring projects to production.

Kinross fell 4.8 percent on Wednesday following the share issue. The price of gold was around $854 an ounce on Wednesday.

The company will focus its search on its main production zones in the western United States, the western slope of the Andes Mountains, central Brazil, and also eastern Russia, where Kinross opened its low-cost Kupol mine last year.

Kupol is one of three new mines that are expected to help boost Kinross's production to as high as 2.5 million ounces this year. The other two mines are the Buckhorn mine in Washington state and the expansion of the Paracatu mine in Brazil.

Kinross said two weeks ago that Paracatu would likely hit full production before the end of the first quarter, but Burt said it might be delayed into the second quarter.

Beyond 2009, Kinross will have to seek growth from three undeveloped projects: Fruta del Norte, Lobo-Marte, and its stake in the Cerro Casale project in Chile, which it owns along with Barrick Gold (ABX.TO).

Burt said he expects a feasibility study on Cerro Casale by the early third quarter, and would expect a construction decision from Kinross and Barrick at that time.

"We're looking at some technology upgrades which might help with processing costs and the like," Burt said.

Assuming positive construction decisions, Burt said Cerro Casale could be up and running by 2013, while Lobo-Marte could reach production by 2011, and Fruta del Norte by 2012.

Fruta's progress will depend on ratification of a new mining law in Ecuador, which Burt said he was happy with.

Burt declined to give a firm prediction on where he sees gold prices going, but he said he was bullish on the metal as he expects stronger demand to combine with tighter supply, both from recycled scrap and mine supply.

"Not to put too fine a point on it, but there's a lot of junior companies that will not be able to build and deliver on new projects in the near term," he said. "That all bodes well for constrained supply and higher prices."

(Reporting by Cameron French; editing by Peter Galloway)