Kinross makes first steps into Africa

Toronto-based Kinross Gold has purchased a $600 million stake in Vancouver-based Red Back Mining, it has been announced.  The C$600 million ($583 million) deal will give Kinross 9.4 percent of Red Back, which runs two mines in West Africa, including the highly regarded Tasiast deposit in Mauritania.  The stake will give Kinross a foothold in a gold mining area with high growth potential, with some analysts suggesting that the move could indicate an imminent takeover.  Red Back owns 90 percent of the Chirano gold mine in Ghana, and 100 percent of the Tasiast gold mine. It is currently exploring additional properties in Ghana, Mauritania and C├┤te DÔÇÖ Ivoire.  Commenting on the deal, Rick Clark, president and CEO of Red Back, said: "We are delighted to welcome Kinross as a shareholder of Red Back.┬áThey have shown great confidence in both countries in which we operate, Ghana and Mauritania, and have recognized the significant growth potential at both Chirano and Tasiast.┬á  ÔÇ£We appreciate their confidence and look forward to continuing Red Back's evolution.┬áWe are now financially secure for future development plans and can focus on increasing reserves and production going forward."  Red Back has moved into the mid-tier league of gold producers on the back of production running at 100,000 ounces per quarter, with full year production likely to come in at half a million ounces.  The company doubled its reserve base in a single year, growing Tasiast from 2.3 million ounces to 5.0 million ounces. Its total estimated mineable resource base is currently 9.1 million ounces.  It currently has nine drilling rigs in operation at Tasiast, but the proceeds from Kinross are expected to boost that number and could result in another sizeable increase in reserves by the end of this year.  The company hopes to produce a total 800,000 ounces a year from 2012.  For Kinross, the deal represents its first foray into Africa. It currently has projects in the US, Russia, Brail, Peru and Chile providing 51 million ounces in proven and probable gold reserves.  The transaction is expected to complete in May.  Kinross's move into Africa comes as rival Barrick Gold is spinning off its Tanzanian assets into a separate company called African Barrick Gold, of which it holds 75 percent.  The move was said to have been a way of separating the higher political risk associated with its Tanzanian operations from the larger company.