Gold at $1,500 is a new price floor, Kinross CEO says

DENVER: Gold prices look to have established a new floor at $1,500 per ounce, Kinross Gold Corp's chief executive officer said on Monday, giving the Canadian miner confidence to push ahead with expansion plans at a key West African mine.

"I don't see a lot of technical barriers above it, but I do believe that there's people buying in to where we are today," Paul Rollinson told Reuters at the Denver Gold Forum.

Kinross on Sunday said it would spend $150-million to boost capacity its Tasiast gold mine in Mauritania to 24,000 tonnes per day by 2023.

Kinross's Toronto-listed shares were up 3.5% on Monday.

Last year, the company shelved a larger, $600-million expansion at the mine after the government requested talks to improve the country's economic benefits from the miner's activities.

Kinross had initially aimed to grow daily processing capacity at the mine to 30,000 tonnes per day after earlier boosting mill throughput to 12,000 tonnes per day from 8,000 tonnes.

It said the smaller expansion would use existing equipment and require minor upgrades in the plant and forecast an internal rate of return of 60% based on a gold price of $1,200 per ounce.

"We're getting to the finish line with way less capital," Rollinson said. He said the company expects $300 million in project financing to be in place later this fall.

The company remains in talks with the newly elected government over taxes and procurement, issues Rollinson said were "manageable." He did not provide a timeline for a resolution.

"Mauritania is a country that is still seeking foreign investment and we are a lens for the world, and they know that," he said.

The company also on Sunday said it had signed a three-year labour agreement in principle with the mine's unionized workers, replacing a previous deal that had been set to expire in November.

"This go-ahead decision reduces uncertainty surrounding potential expansion plans and the ongoing discussions on shared benefits from Tasiast with the Mauritanian government," RBC Dominion Securities Inc. analyst Stephen Walker said in a research note.