Kinross's Alaska mine output falls 29% as less Manh Choh ore reaches the mill

Kinross Gold's two Alaska mines produced 29% less gold and silver in the third quarter than a year earlier, and each ounce sold cost 46% more to produce, the company reported Wednesday.

Most of the drop traces to Manh Choh, the mine near Tok whose ore is trucked to Kinross's Fort Knox mill northeast of Fairbanks. The mill ran 185,000 tonnes of Manh Choh ore, down from 286,000 a year earlier, and Kinross said production fell "primarily due to the decrease in tonnes processed and mill grades from Manh Choh."

Rain also slowed mining. The operation mined 23% less ore "as a result of significant rainfall impacting mining productivity," the company's quarterly report says.

Kinross reports the two mines as one operation. Together they produced 80,118 gold-equivalent ounces, down from 112,181. That measure converts silver to its value in gold.

Kinross doesn't break out Manh Choh's output, but it does subtract the 30% share owned by its partner, Contango: 7,675 ounces this quarter, against 16,439 a year earlier. Working backward from those numbers, by Alaska News' calculation, Manh Choh produced roughly 25,600 ounces, less than half as much as a year earlier. Fort Knox's own output slipped about 5%, to roughly 54,500.

Kinross's average gold price across its mines was $4,249 an ounce, up 23%, so sales fell less than production did. Sales from the Alaska mines dropped 18%, to $333.8 million, and operating earnings fell 45%, to $90.4 million. Costs held at about $159 million but were spread over fewer ounces, pushing the cost of each ounce sold to $1,981 from $1,359.

The company's news release described it differently, citing mill maintenance and planned lower grades, "partially offset by improved mill recoveries." The mill recovered 84% of the gold in its ore, up from 82% in the second quarter but down from 90% a year earlier.

Over the first nine months of the year, Alaska production is down 15%, to 286,990 ounces, and the cost per ounce sold has risen to $1,800 from $1,263. With higher prices, sales still rose 17%, to about $1.28 billion, and operating earnings up 5%, to about $499 million.

Across all its mines, Kinross produced 424,693 ounces it counts as its own, down from 503,862. It attributed the drop to "planned lower production from Fort Knox and Bald Mountain," along with lower output at La Coipa in Chile and Round Mountain in Nevada, and said it remains on track for the lower forecast it issued in September.