Thanks to higher production and higher prices, Kinross Gold Corp. Feb. 21 posted 2007 earnings of $334 million, or 60 cents per share, up substantially from $165.8 million, or $0.47 per share, in 2006.

The Toronto-based owner of the Fort Knox gold mine also reported fourth-quarter 2007 earnings of $173.1 million, 29 cents per share, up more than 322 percent from $41 million, or 11 cents per share, for the same period in 2006. The fourth-quarter earnings included a gain relating to an asset swap transaction with Goldcorp.

Full-year revenue rose 21 percent to a record $1.1 billion from $905.6 million in 2006, and the average realized gold price was $697 per ounce. Revenue for the fourth quarter totaled $281.4 million, up 22 percent from the same period last year, and the average realized gold price was $796 per ounce.

Gold production at Fort Knox near Fairbanks increased slightly in 2007 to 338,459 ounces from 333,383 ounces during 2006. Overall, Kinross produced nearly 1.59 million gold equivalent ounces, up 7.7 percent from 1.48 million gold equivalent ounces a year earlier.

At Fort Knox, ore mined in 2007 jumped 41 percent from 2006 volumes due to increased stockpiling of low grade material, Kinross said. Gold equivalent ounces produced increased in 2007 due to a grade increase of 7 percent, however, ounces sold decreased slightly, due to timing of the sales. Lower sales of gold equivalent ounces were offset by a higher gold price, which increased revenues by 10 percent over 2006 results.

Project should double life-of-mine production

Kinross said cost of sales at Fort Knox rose 11 percent in 2007, reflecting higher costs for consumables such as fuel and electricity. Exploration costs also increased to $4.4 million from $1.4 million in 2006 as a result of increased core drill activity, in support of the Fort Knox Project: Heap Leach Addition and Phase 7 Pit Expansion.

Kinross said its directors gave final approval for the $270 million heap leach and pit expansion project, which is expected to extend the life of the mine by five years and double life-of-mine production to 2.9 million gold equivalent ounces.

Fort Knox currently mines and stockpiles large volumes of low grade ore and mineralized waste material that cannot be economically processed at the existing mill. The heap leach facility will allow the mine to process some of these low-grade materials, as well as zones of lower-grade ore that have not yet been mined.

The project will increase Fort Knox production to an average 370,000 gold ounces per year for five years beginning in 2010. It also will reduce the average life-of-mine cost of sales to about $390 per ounce.

Capital expenditures for the project are expected to total $175 million in 2008 and 2009, with annual deferred development costs of about $30 million per year related to the pit expansion from 2010 to 2012. The heap leach project is expected to begin production at the end of 2009 and Phase 7 will begin to contribute production in 2010.

Exploration at site is continuing, with some 5,900 meters of drilling completed, and 1.2 million ounces of additional gold reserves declared as of the end of 2007.

Kinross said it has received all federal and state permits required for the project.