MAC: Mines and Communities

Chile: Kinross closes Maricunga gold mine

Published by MAC on 2016-09-06
Source: Mining Weekly, Reuters

Court ruling upheld local regulator’s resolution to close damaging water pumping wells

Maricunga is an open-pit mine located approximately 120 kilometres east of Copiapó, between 4,200 and 4,500 metres above sea level.

Previous on MAC:

2016-03-27 Chile orders closure of Maricunga water pumping wells

Kinross suspends Chile mine ops, lays off 300 workers

Henry Lazenby

26 August 2016

VANCOUVER – Canadian miner Kinross Gold has laid off about 300 workers at its Maricunga mine, in Chile, after it was forced to suspend operations earlier than planned, owing to a court ruling upholding a local regulator’s resolution to close the mine’s water pumping wells.

Kinross previously stated that it planned to suspend mining at Maricunga in the fourth quarter, owing to other capital priorities in its global portfolio. However, Reuters reported last week that Kinross was looking to sell the asset in a bid to exit the jurisdiction.

Chile’s environmental regulatory authority started a legal proceeding in March to force closure of the pumping wells. The sanction, issued in July, substantially reduced water pumping at Maricunga, which caused the mine to suspend mining and crushing activities and to curtail processing at the end of that month.

Kinross does not expect its overall production and cost guidance to be impacted despite the earlier suspension.

The company adds that it continues to vigorously oppose the regulator’s “unprecedented actions” and has various appeals pending with Chile's environmental tribunal.

Kinross says it disagrees with the original resolution on which the subsequent orders are based as it is, in its opinion, technically and legally flawed and relies on contested scientific findings.

The Atacama region, where Maricunga is located, has also suffered from a protracted drought for many years, resulting in a drop in groundwater levels across the region that is unrelated to the mine's operations.

At December 31, the Maricunga mine had estimated proven and probable mineral reserves of 1.04-million ounces, estimated measured and indicated mineral resources of 4.28-million ounces and estimated inferred mineral resources of 1.05-million ounces.

Kinross resumed operations at its Tasiast mine, in Mauritania, in mid-August, following its temporary suspension caused by an expatriate work permit issue.

Kinross to retreat from Chile, puts unit on the block: sources

John Tilak and Rosalba O’Brien

Reuters -

August 18, 2016

Canada’s Kinross Gold Corp. is looking to retreat from Chile and has put its main assets in that country up for sale, according to people familiar with the process.

The world’s fifth-largest gold miner by output has hired Bank of Nova Scotia to help find buyers for its two main Chilean gold mines, the sources said. They requested anonymity because the matter is not public.

Interest has been very strong, with bids coming from mining companies from Canada, Chile and other parts of the world, the sources said.

“We have received expressions of interest for Maricunga and La Coipa, as we do for our other assets from time to time, and we continue to keep our options open,” said Kinross spokesman Louie Diaz.

He declined to comment on whether the company has begun a formal process to sell its Chilean mines.

The company has suspended operations at both the Maricunga and La Coipa mines.

Citing environmental damage that has been disputed by Kinross, Chile’s environmental regulator shut down the water system linked to the Maricunga mine in March.

After a suspension in May, mining resumed in July, subject to ongoing regulatory proceedings. Diaz said the mine was suspended again that month, following pressure from the regulator.

Operations at La Coipa were suspended in 2013.

Located in northern Chile, Maricunga produced 212,155 gold equivalent ounces last year, making up about 8 per cent of the company’s total production.

Chile produced 40,829 kilos of gold in 2015, according to government statistics, or about 1.4 million ounces.

On a conference call on July 28, Kinross chief executive officer Paul Rollinson said the company was “not in a situation where we need to sell assets,” but no decision had been made on a sale.

According to the Chilean government’s lobbying transparency website, two representatives from Kinross – Bob Musgrove, VP of operations in South America, and Jose Letelier, VP of external affairs in Chile – visited with Mining Minister Aurora Williams on April 12 to discuss “information on the mine’s situation.” Letelier told Reuters on Thursday that the meeting concerned the environmental issue.

Toronto-based Kinross also has mines and projects in Brazil, Russia, Mauritania, Ghana and the United States.

Last year, Kinross acquired some Nevada assets from Barrick Gold Corp., and sources told Reuters at the time that Kinross was aiming to increase its exposure in safer mining jurisdictions.

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