Kinross Gold Corp. has struck a US$283-million deal to buy a Russian gold development project, its first gold acquisition in four years. In a statement after the close of markets on Wednesday, Toronto-based Kinross said it had reached a friendly arrangement with privately held N-Mining Ltd. to purchase the Chulbatkan project for a combination of cash and stock.
Kinross hopes to eventually develop the property, located in the Khabarovsk region of Russia’s far east, into a low-cost, open-pit gold mine. Cyprus-based N-Mining was founded by a number of former executives of Polyus Gold International Ltd., Russia’s largest gold producer.
Kinross said its own drilling, conducted over the past 16 months, indicates the Chulbatkan property contains a resource of 3.9 million ounces of gold. Over the next three years, Kinross plans to do more drilling to try to prove the project’s economic viability. Kinross’s early study points to a six-year mine life, with an all-in sustaining cost of US$550 an ounce and an initial capital cost commitment of half a billion dollars.
“We’re really excited about the potential,” Paul Rollinson, chief executive officer of Kinross, said in an interview. The company expects the deal to close by early next year.
The Chulbatkan purchase broadens Kinross’s already considerable footprint in Russia. The company operates two gold mines in the country and about 20 per cent of its production comes from the region.