The Canadian Press, August 13, 2009 - 2:41 p.m.

Kinross turns focus to organic growth, particularly in Chile, for rest of 2009

By Kristine Owram, The Canadian Press

TORONTO - Kinross Gold Corp. (TSX:K) plans to focus on organic growth for the remainder of 2009 as exploration and expansion progress at a number of projects, the gold miner's president and CEO said Thursday.

Tye Burt said he expects the expansion plant at the Paracatu mine in Brazil to be operating at "optimum capacity" within the next three to four months.

The project, which is expected to increase mill throughput by 18 million tonnes to 60 million tonnes per year and to roughly triple gold production, was scheduled to reach full capacity in the first quarter of 2009.

Burt said recoveries are still below the target of 80 per cent, but it's important not to rush the project.

"Given that this expansion extends the life of Paracatu to over 30 years, it's important that we take the time to get the plant operating as planned and progress has been good," he told analysts in a conference call Thursday.

Meanwhile, Burt said construction of a heap leach facility at the Fort Knox mine in Alaska is progressing on schedule.

The facility will extend the mine's life from 2012 to 2018 by allowing it to process lower-grade ore than the existing mill. It is also expected to double life-of-mine production to 2.9 million ounces while reducing cost of sales.

"We're proud to say this project is moving forward on time, on budget and our team in Alaska is doing a great job," Burt said.

"In addition, we're having early drilling success on the property and at adjacent properties so we're excited about further mine life potential at Fort Knox."

The Toronto-based gold miner's "core focus for future growth" is the Maricunga belt in Chile, where Kinross operates the Maricunga and La Coipa mines as well as the Cerro Casale project.

Kinross hopes to complete a pre-feasibility study by the end of the year that will evaluate expanding the current plant at Maricunga as well as adding a second crushing plant.

"(This expansion has) the potential to increase production significantly at this site," Burt said.

"We first began to evaluate this expansion in late '08, the initial scoping study was positive and with a current reserve base of 6.5 million ounces and resources of another 2.3 million ounces, plus further exploration potential, this opportunity to expand at Maricunga could bring forward significant value to shareholders driven from existing assets."

Burt said Kinross's expansion and exploration projects are aimed at lowering production costs while improving margins on increased production.

And the company continues to look for other opportunities to expand organically, added chief operating officer Tim Baker.

"We continue to focus considerable effort on further organic growth, evaluating opportunities for lower costs, increased throughput and extended mine life at our current operations, particularly the possibility of expanding production at Maricunga," Baker said.

Late Wednesday, Kinross reported a second-quarter profit of US$19.3 million or three cents per share for the quarter ended June 30, down from $26 million or four cents per share a year ago.

Revenue totalled $598.1 million, up from $298.7 million in the second quarter of 2008, while attributable gold equivalent ounces produced totalled 560,479, up from 406,032 ounces a year ago.

The average realized gold price was $915 per ounce, up from $903 per ounce last year.

The gold miner also said it would pay a dividend of five cents per share, up 25 per cent from its dividend earlier this year.

"This reflects higher gold prices, our strong cash flows and our positive outlook on future performance," Burt said.

Kinross revised its production guidance slightly lower and said it now expects to produce 2.3 million to 2.4 million gold equivalent ounces this year, primarily due to a longer-than-expected ramp-up at its Paracatu expansion.

Kinross owns mines and projects in the United States, Brazil, Chile, Ecuador and Russia, and employs approximately 5,500 people.

Shares in the company gained 27 cents to $21.37 in afternoon trading on the Toronto Stock Exchange.