Currently viewing Global edition

Kinross to add to Russia portfolio

Kinross Gold is adding to its Russian portfolio, agreeing to acquire the Chulbatkan gold development project in Far East Russia for US$283 million.
Kinross to add to Russia portfolio Kinross to add to Russia portfolio Kinross to add to Russia portfolio Kinross to add to Russia portfolio Kinross to add to Russia portfolio

Trial mining at Chulbatkan, which Kinross plans to add to its Russian portfolio

Staff reporter

The Canada-based gold producer said the project was an "excellent fit" for the company and would enable it to leverage its expertise as a world-class, cold climate heap leach operator.

"Chulbatkan is an exciting, high-quality development project with significant upside potential and low relative execution risk, located in a country where we have had extensive experience and success, and maintain a strategic and competitive operating advantage," president and CEO J. Paul Rollinson said.

Kinross said it had conducted due diligence over 16 months and preliminary estimates were for a six-year mine life with initial capex of $500 million, producing 1.8 million ounces with all-in sustaining costs about $550/oz.

It said Chulbatkan had exploration and mining licences to the end of 2037 and starter infrastructure, including a base camp, trial pit, non-commissioned ADR plant and heap leach pad.

Kinross' Magadan office is equidistant between Chulbatkan and its Kupol gold mine.

Vendor N-Mining is set to receive $113 million in cash, $170 million in Kinross shares, a 1.5% NSR and contingent consideration of $50/oz of future proven and probable reserves beyond the first 3.25Moz.

Earnings increase in June quarter

Kinross meanwhile said it was on track to meet its 2019 gold-equivalent production guidance of about 2.5Moz.

It said its three largest mines - Kupol-Dvoinoye in Russia, Tasiast in Mauritania and Paracatu in Brazil - represented more than 60% of total company production and had achieved the lowest costs in portfolio for the June quarter and the first half of 2019.

Adjusted net earnings doubled from a year earlier of $79.6 million or 6c per share, up from $37.8 million or 3c per share in the second quarter of 2018.

Kinross reported revenue of $837.8 million for the period, up from $775 million a year earlier mainly due to an increase in gold-equivalent ounces sold.

It had cash and equivalents of $475.4 million.

Its Toronto-listed shares closed down about 5% yesterday to C$5.34, near the upper end of its 52-week range, capitalising it at $6.7 billion (US$5 billion).