Canadian miner Kinross Gold (TSX:G) (NYSE:KGC) is expanding operations in Russia by buying a development project in the eastern part of the country for $283 million from Cyprus-based N-Mining.
The Toronto-based company, which
already has two underground gold mines in Russia, said the Chulbatkan gold
project was an “excellent fit” as it would enable Kinross 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 chief executive J. Paul Rollinson, said in the
statement.
The deal includes payment of about $113
million in cash and $170 million in Kinross shares. It also gives N-Mining a
small share of returns from production.
Preliminary estimates for Chulbatkan
point to a six-year mine life with initial capex of $500 million, producing 1.8
million ounces with all-in sustaining costs about $550 per gold ounce.
The project has exploration and
mining licences valid until the end of 2037. It also counts with starter
infrastructure, including a base camp, trial pit, non-commissioned processing
plant and heap leach pad.
Kinross already operates Kupol and
Dvoinoye mines in Russia, which account for roughly 20% of its 2019 production
guidance of 2.5 million ounces.
News of the acquisition came as the gold producer, which reports in US dollars, logged earnings of $71.5 million for the quarter ending June 30, up from $2.4 million in the same quarter last year.
Adjusted net earnings came to $79.6
million, or six cents per share, compared with $37.8 million or three cents per
share in the same period of 2018.
Revenue from metal sales was $837.8
million for the quarter, compared with $775 million last year on an increase in
metal sold.
Robust gold prices have also made the company mull the reopening of some halted operations. In May, Kinross revealed it was evaluating options for returning to long-term production in Chile, the world’s top copper miner, where the company already has two key assets — La Coipa gold-silver mine and the Lobo-Marte project.
