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Kinross Gold’s Ascending Star

By James West
MidasLetter.com
Thursday, May 14, 2009

Of all the gold mining companies on earth, Kinross Gold (TSX:K, NYSE:KGC) has got to be one of the most fascinating to follow. Daring to tread where most majors recoil in fear, Kinross has demonstrated a willingness and an ability to get results in politically sensitive jurisdictions. Its boldness is rewarded, so far, by lower acquisition costs of future ounces.

Not only does the company wander into thorny countries in pursuit of gold, it also employs a program of junior mining investment and joint ventures that gives it a steady source of blue sky acquisition opportunities as the tenacious and focused juniors push their respective projects towards production.

According to the Kinross 2008 Annual Report, “Kinross has been pursuing a strategy of acquiring equity positions as a long-term partner in promising junior companies on a select basis, in order to maximize exposure to new prospects and growth opportunities at a relatively small capital investment.

Among Kinross’s partnerships:

Midway Gold Corp (TSX.V:MDW, NYSE.A:MDW)
Kinross Gold Corporation (NYSE: KGC) has entered into an exploration and option to joint venture agreement by which they can earn a 75% interest in Midway's 100% owned Thunder Mountain project, in Nye County, Nevada.

To maintain the option, Kinross must spend a minimum of $500,000 by August 1, 2010 and a total of $3 million over a five year period. Upon completion of the earn-in, standard joint venture terms will apply.

Thunder Mountain is a gold and silver rich epithermal vein and disseminated system hosted in rhyolite tuffs and flow dome complexes located six miles southeast of the Midway project. Adularia alteration has affected rhyolite tuff units over the three square mile project area. Recent drilling has intercepted higher grade gold in silicified breccias hosted rhyolite tuff containing 70 feet of 0.105 ounce per ton gold beginning at a 55 foot depth (MDW Press Release dated October 18, 2007) and 40 feet of 0.135 ounce per ton gold at 70 foot depth (MDW Press Release dated May 1, 2008) along with other reported intercepts.

Underworld Resources (TSX.V:UW)
Kinross invested $1 Million in Underworld Resources in October 2008 and now holds 9.7 % of that company’s outstanding shares.

Underworld's 100% controlled White Gold property in Canada's Yukon is one of the best ever for the territory, and probably the best new discovery in Canada of the last year or two. Together with the adjacent Black Fox property, approximately 100 square kilometers of terrain accessible by air, road and barge are currently being explored.

• 18.1 meters grading 4.35 grams per tonne gold;
• 17.7 meters grading 4.38 grams per tonne gold;
• 16 meters grading 4.2 grams per tonne gold;
• 16 meters grading 4.16 grams per tonne gold;
• 21.6 metres grading 5.6 grams per tonne gold;
• 14.2 meters grading 3.38 grams per tonne gold;
• 50.7 metres grading 3.1 grams per tonne gold.

Riverside Resources (TSX.V:RRI)
Kinross purchased 1.25 million shares of Riverside Resources in May of 2008 at $1.20 per share, representing approximately 7% of Riverside’s outstanding shares.

Described as an “Exploration Alliance”, Riverside CEO John-Mark Staude said, “The Exploration Alliance is a key step forward for Riverside. It is part of our strategy to not have to raise money in the near term, since we are now fully funded for the next three years’ programs.”

“The area covered by the Alliance is north of Mag Silver’s (NYSE Alternext: MVG, TSX:MAG) Fresnillo high grade silver district, and south of Endeavour Silver’s (NYSE Alternext: EXK, TSX: EDR) Guanacevi silver-gold mining district It’s right in one of the sweet precious metal spots of Mexico,” said Dr. Staude.

Riverside Resources operates a prospect generator business model leveraging an experienced management team, a proprietary geological database and local knowledge to identify and acquire high-quality exploration opportunities. In its first year, Riverside has acquired six properties: five located in Mexico and the Sugarloaf Peak Gold project located in Arizona, USA.

Rye Patch Gold (TSX.V:RPM)
In May of 2008 Kinross purchased 5 million shares in Rye Patch at $0.25 a share, giving it a 15% stake.

CEO Bill Howald’s goal is 10 million ounces of gold. An ambitious target for most juniors, but Rye Patch is well its way. The company recently announced a 43-101 compliant resource estimate on its flagship Wilco project that puts a total of 2.35 million ounces of gold across the measured, indicated and inferred resource categories. It is currently in the process of authoring a 43-101 report for its Jessup property, and expects to generate one for the Lincoln Hill target by the end of 2009.

The company’s business model is to become a provider of replacement ounces to majors in the area who are experiencing an overcapacity of production relative to diminishing reserves in the ground.

In the fourth quarter Kinross also participated in private equity placements by BCGold Corp., Oro Silver, and Victoria Gold.