TORONTO (miningweekly.com) – Red Back Mining, which agreed last month to be acquired by larger rival Kinross Gold, has announced a 42% increase in the measured and indicated resource at its Tasiast gold mine, in Mauritania. At the same time, Kinross disclosed its "conceptual estimate" of total resources at the operation.
The news is well timed, as both Kinross and Red Back shareholders will vote next week on the transaction.
There has been some concern from Kinross investors that it is overpaying in dilutive equity, but Kinross CEO Tye Burt has urged shareholders to trust him, insisting that the future growth at Tasiast, in particular, will mean the transaction is ultimately accretive.
While proxy advisory firm Glass, Lewis & Co has recommended the transaction to investors, Institutional Shareholder Services last week advised against the deal.
The measured and indicated resource at Tasiast has increased by 2,74-million ounces of gold, to 9,25-million ounces of gold, Red Back said on Tuesday.
The inferred resource has also increased by 28%, to 1,93-million ounces.
"Red Back's updated mineral resource estimate confirms Kinross' view of Tasiast's tremendous potential based on our six months of intensive due diligence,” Burt said on Tuesday.
"We expect to add significant further new resources following the closing of the transaction, by increasing the number of drill rigs at Tasiast and accelerating the current drilling campaign to delineate the high-grade zone at depth," he added.
Kinross said on Tuesday its preliminary estimate is for a total potential resource at Tasiast of at least 350-million to 425-million tons, grading between 1,5 g/t and 1,8 g/t for the life of mine.
The company would mine higher grade ore earlier in the mine life.
Kinross said last week it will launch an “intensive” exploration programme soon after the deal closes, and plans to announce a new NI 43-101-compliant resource for Tasiast in February next year.
The company also expects to fast-track engineering and project development work on the Tasiast expansion, including tendering for an engineering, procurement, construction management contractor, completion of a scoping study by December 2010, and completion of a feasibility study by July 2011, it said.
Kinross is currently planning a new mill with an increased capacity from the current 10 000 t/d to around 60 000 t/d, together with a new, larger mining fleet.
The company also expects reserves and resources to grow at Red Back's other mine, the Chirano operation in Ghana, Burt said.