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Kinross Gold to start mining 2 new Russian deposits by 2018

Kinross Gold Corp. is set to start mining two small but high-grade silver and gold deposits in Russia by 2018, according to Lou Naumovski, head of Kinross' Russian operations.

The Toronto-listed company will begin mining Moroshka, located 4 kilometers east of the Kupol site, by 2018, and at September Northeast, located 15 kilometers northwest of Dvoinoye, by late 2017, he told the conference audience in Moscow Oct. 5.

Moroshka has underground contained gold of approximately 182,000 ounces at a grade of about 17 g/t, while the September East deposit has approximately 68,000 ounces of gold at a grade of 32 g/t.

Construction of haulage roads and mine camps at the two new areas was completed in the summer.

Kinross, whose Russia-based production accounted for nearly a third of the company's worldwide total last year, has been seeking ways to expand resources in Russia, where production costs have fallen due to the weakness of the ruble, and where demand for gold is still high — despite the country's economic contraction — due to central bank purchases.

The Central Bank of Russia purchased 625.9 tonnes of the yellow metal between 2011 and 2015, second behind the Chinese central bank, according to data presented at the same conference by the World Gold Council.

Kinross has been actively drilling around its two existing mines, which produced a combined 758,563 ounces in 2015, at a cash cost of US$474 per ounce, Naumovski said. That compared to the company's worldwide gold production in the same year of 2.6 million ounces at a cost of US$696 per ounce, according to information in a Sept. 20 investor presentation.

The company is planning to continue drilling in gold-prospective areas between the Kupol mine and the new Moroshka area, and additional gold targets have been identified, according to information on the company's website.

Naumovski said the mill at Kupol, which also processes ore from nearby Dvoinoye, had capacity of 4,500 tonnes per day, leaving sufficient room for additional ore streams from the two new mines. Naumovski did not provide any information on the projected annual gold output from the proposed new mines.

While Kinross in Russia has focused on exploration around its existing mines, Naumovski also said the company would consider buying resources at the right price.

"We get two to three proposals every few months," he said in answer to a question from the conference audience, supporting comments by Kinross CEO Paul Rollinson earlier in the year that Kinross would consider buying assets, including the giant Sukhoi Log deposit.

But despite its desire to secure bigger gold resources in the Russia, Kinross could be forced to rely on resource and reserves developments at its existing mines.

That is because of the dearth of cheap and quality deposits for sale, while politically connected Russian companies may also have locked out competitors in the race for the last few big gold deposits in the country.