Kinross and Bema Plan to Recommence Gold Mining at Refugio
Kinross Kettle River Update
Toronto, Ontario, December 4, 2003…Kinross Gold Corporation (TSX-K; NYSE-KGC)
("Kinross") and Bema Gold Corporation (TSX-BGO; Amex-BGO; AIM-BAU) (“Bema”)
are
pleased to announce that their respective boards of directors have approved the recommencement of
gold operations at the Refugio heap leach mine located near Copiapo, Chile.
Compania Minera Maricunga (“CMM”) owns the Refugio mine and is owned 50% by Kinross (the
operator) and 50% by Bema. The Refugio mine had been placed on care and maintenance in May 2001
due to low gold prices and has produced declining amounts of gold from residual leaching of existing
heaps since that time. During the past year, a 56,000 metre drill program was successful in expanding
reserves to justify a greater than 25% expansion of daily throughput compared to historic production
levels. Initially, the Verde pits are scheduled to produce 40,000 tonnes of ore per day, which will be
crushed and placed on the leach pads. Subsequently, the new Pancho pit, expected to be mined at
35,000 tonnes of ore per day, will extend the mine-life to approximately 10 years at an assumed gold
price $350 per ounce. Life-of-mine annual gold production is expected to range from 230,000 to
260,000 ounces on a 100% basis at total cash costs averaging approximately $225 per ounce.
Production is expected to recommence late in the fourth quarter of 2004. Initial capital costs on a
100% basis for the expanded project are estimated at approximately $71 million to repair and replace
critical components of the existing infrastructure, increase reliability, improve serviceability and provide
a safe and efficient work environment. In addition, a new mining fleet will be purchased and is
expected to be financed through a capital lease of approximately $30 million. Major capital items
include plant modifications and upgrades, the purchase of a new mining fleet and a modest pre-
stripping program. A 110-kilometre power line connected to the Chilean grid will replace the previous
diesel generated power. Kinross is currently evaluating various financing opportunities for its 50% of
capital contributions.
The combination of improved gold prices and expanded reserves have resulted in robust economics for
the expanded project. At the base case gold price of $350 per ounce, the proven and probable reserves
(100% basis) are estimated at 124,054,000 tonnes at a grade of 0.86 grams of gold per tonne for
3,433,000 ounces of gold. The base case project economics indicate a pre-tax internal rate of return
(“IRR”) of almost 22% and a payback of approximately 3.8 years. The sensitivity analysis of the
project economics yields an IRR of approximately 34% and a payback of 2.6 years at the current gold
price of $400 per ounce.
Bob Buchan, President and CEO of Kinross stated, “During its previous operating history, the Refugio
mine consistently failed to meet expectations due primarily to poor design and construction
compounded by declining gold prices; however, the grade, tonnage and metallurgy of the ore
consistently met expectations. We are particularly pleased in this improved gold price environment, to
be able to recommence operations at Refugio with a substantial capital program to address the
previous deficiencies, thereby allowing the operation to reach its true potential.”
At Kinross’ 100%-owned Kettle River operation located in Washington State, the mill is being prepared
for a restart about mid-December with approximately 15,000 tons of ore, grading approximately 0.30
ounces of gold per ton, that has been delivered to the mill from the Emmanuel Creek zone at the K2