Kinross Gold has announced an agreement with N-Mining Limited to acquire Chulbatkan, a high-quality, heap leach development project with significant upside potential and low relative execution risk, for a total fixed consideration of $283 million.
Kinross Gold’s President & CEO J. Paul Robinson commented: “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.
“This acquisition is an excellent fit for Kinross as it enables us to leverage our expertise as a world-class cold climate heap leach operator. With a large estimated mineral resource, Chulbatkan has the potential to be a significant low- cost, low-strip, high-return operation that will strengthen our longer-term production and cash-flow profile. It is an excellent complement to our existing operations at Kupol and Dvoinoye, both of which remain prospective in their own right.”
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Strategic rationale for acquisition:
- High-quality development project with strong upside potential. Large, high-grade, near-surface resource with potential to support a low-cost, low-strip, high-return, open-pit, heap leach operation. Estimated indicated resource of approximately 3.9 million ounces of gold and estimated inferred resource of 80,000 ounces of gold. Highly continuous mineralization remains open along strike and at depth with potential for additional high-grade structures within the resource. Multiple promising satellite targets within the under-explored 120 sq. km license.Exploration and mining license in place until the end of 2037.
- Leverages operating expertise.Project’s favourable leach characteristics a clear strategic fit with Kinross’ world-class, cold climate heap leach expertise, with features similar to the Company’s Fort Knox mine in Alaska.
- Builds on existing regional platform. Expected to strengthen Russia region’s long-term production and cash flow. Kinross has 24 years of operational success in-country, having operated four mines, including developing Kupol and Dvoinoye, two low-cost mines, on budget and on schedule.
- Aligns with project pipeline and capital priorities. Expect to conduct a comprehensive exploration program, complete pre-feasibility and feasibility studies within the next three years, and targeting a two-year construction period. This initial timing complements existing Kupol and Dvoinoye operations and Company’s broader project plans.
- Maintains strong liquidity position through a mix of cash and shares. Cash and share transaction, and timing of payments, maintains Kinross’ strong liquidity.
Chulbatkan is a high-grade, open-pit, heap leach project that is expected to be a high-return operation with a low strip ratio, attractive costs, significant upside potential and low relative execution risk. Kinross Gold has completed substantial due diligence on Chulbatkan over the past 16 months, including analysis of eight confirmatory drill holes that showed positive results, and a metallurgical testing program consisting of eight trial leach columns confirming favourable leach characteristics and recoveries.