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OTTAWA— Kinross Gold Corp.’s drubbing by investors over delays at its trophy gold mine in West Africa is a fresh reminder of the gulf between the fortunes of those who dig for gold, and the metal itself.
While gold continues to trade at historically high levels – closing up $24.80 at $1,655.60 an ounce Tuesday – gold miners are contending with market antipathy due to rising costs and a string of unpopular and costly acquisitions. In such an environment, tolerance for bad news is low.
Kinross discovered that the hard way Tuesday, after saying it would take six to nine months more than expected to study and plan its Tasiast mine in Mauritania, delaying development and possibly negatively affecting production.
Kinross chief executive officer Tye Burt said in an interview that Kinross was acting in “a prudent, carefully considered and conservative” way by rationalizing its capital and project management, a process that could also affect timing of development projects in Ecuador and Chile. The company said it will also write down the value of Tasiast.
Investors drove down Kinross stock. It was a major decliner on North American stock exchanges, plunging more than 21 per cent in Toronto to close at $10.39 in heavy trading. Shares in gold miners, including Barrick Gold Corp., Goldcorp Inc. and Newmont Mining Corp., also fell.
“I think the market is anxious for more news, more information, and we simply haven’t completed our work yet,” Mr. Burt said.
“What we’re doing is responding to a volatile market environment … by managing the risks incurred with large project construction.”
He said the company is building three projects almost simultaneously – the combined costs are between $6-billion and $7-billion – and wanted to avoid the problems of other gold miners.
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