Today, Kinross announced agreements to acquire 70% of the high-quality Peak Gold project in Alaska from Royal Gold, Inc. and Contango ORE, Inc. for a total cash consideration of $93.7 million. Kinross will have broad authority to construct and operate Peak Gold, with Contango retaining a 30% non-operating minority interest.
“The relatively high-grade, low-cost Peak Gold project is an excellent addition to our portfolio, as it allows us to utilize our existing mill and infrastructure at Fort Knox and strengthens our medium-term production and cash flow profile. In today’s gold price environment, Peak Gold is an attractive, high-margin project that is expected to generate robust returns,” said J. Paul Rollinson, President and CEO. “The project is also expected to add to our strong record of socio-economic contributions to our host communities in Alaska, one of the top mining jurisdictions in the world.”
The project is located approximately 400 kilometers southeast of our Fort Knox mine, and is a low-risk “tuck-in” to supplement Kinross’ existing Alaska operation. Kinross plans to process Peak Gold ore at Fort Knox, utilizing the existing mill and infrastructure to benefit both the project and the mine. Blending the higher grade ore from the Peak Gold project with Fort Knox ore is expected to reduce overall costs at Fort Knox, significantly increase cash flow, and extend mill operation.
The project is expected to benefit local communities, in particular the Upper Tanana Athabascan Village of Tetlin, contribute to the state economy and provide additional employment opportunities in the area.
Kinross has held productive meetings with leaders of the Village of Tetlin, who have indicated their support for the project development plan. Kinross also plans to rename the project in consultation with the Village of Tetlin and looks forward to a productive and mutually beneficial partnership with the community.
“We look forward to the safe and responsible development of the project and the positive benefits it is expected to generate for our community,” said Village of Tetlin Chief Michael Sam. “We also look forward to further building a relationship with Kinross, a company with a strong track record in Alaska, and are pleased to see further investment plans for the project.”
To learn more about the acquisition, view the news release here and view presentation here.