The Chulbatkan gold project is said to be a high-quality, heap leach development project with considerable upside potential and low relative execution risk
Image: Chulbatkan gold project to be acquired by Kinross Gold. Photo: courtesy of rawpixel/Pixabay.
Canadian gold miner Kinross Gold has agreed to acquire the Chulbatkan gold project in the Khabarovsk Krai district, Far East Russia, from N-Mining for $283m (£233.66m) in a cash-cum-stock deal.
According to Kinross Gold, Chulbatkan is a high-quality, heap leach development project with considerable upside potential and low relative execution risk. Based on the company’s preliminary approximate estimates, the Chulbatkan gold project will have a mine life of six years, and a total life of mine production of 1.8 million recovered ounces.
Kinross Gold expects the initial capital expenditures for Chulbatkan to be $500m (£412.83m). The gold deposit is said to contain multiple potential satellite targets within the under-explored license spread over nearly 120km2.
The senior gold mining company said that it estimates nearly 3.9 million gold ounces in indicated mineral resources and estimated inferred mineral resources of 80,000 gold ounces for the Chulbatkan gold project, based on its analysis and substantial due diligence work.
Kinross Gold president and CEO Paul Rollinson said: “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.”
As per the terms of the deal, the Cyprus-registered N-Mining will be paid around $113m (£93.3m) in cash and about $170m (£140.36m) worth Kinross Gold shares.
Additionally, N-Mining will be entitled to a 1.5% net smelter return (NSR) payment and contingent consideration associated with the future reserve additions at the Russian gold deposit.
The acquisition, which is subject to customary conditions like regulatory approvals and others, is expected to be completed by early 2020.
Kinross Gold’s plans to advance the Chulbatkan gold project
Kinross Gold expects to begin an exploration drill program, and carry out core re-logging and updating the geologic model among other works, in order to update the resource base of the Russian gold deposit apart from converting estimated mineral resources to estimated mineral reserves.
The Canadian miner also has plans to complete pre-feasibility and feasibility studies for the Chulbatkan gold project within nearly three years, while targeting a two-year construction period.
The Russian gold project has exploration and mining licenses, which are valid until the end of 2037. It is supported by existing starter infrastructure, which includes a base camp, and trial scale pit, a non-commissioned adsorption, desorption and refining (ADR) plant and heap leach pad.