On July 31, Kinross reached an agreement to acquire Chulbatkan, a high-grade, open-pit, heap leach development project in Russia’s Far East, with significant upside potential.
With an estimated indicated resource of approximately 4 million ounces of gold and estimated inferred resource of 80,000 ounces of gold*, Chulbatkan has the potential to be a low-cost, low-strip, high-return operation.
Building on our successful 24-year operating history in Russia, the Chulbatkan acquisition is expected to strengthen our Russia region’s long-term production and cash flow profile.
We expect to conduct a comprehensive exploration program, complete studies within the next three years, and are targeting a two-year construction period. The timing is well aligned with Kinross’ current project development pipeline and capital priorities, and complements existing Kupol and Dvoinoye operations and exploration programs.
Kinross agreed to purchase Chalbatkan for $283 million, including $113 million in cash and $170 million in Kinross shares, preserving our strong liquidity position.
“Chulbatkan is an exciting high-quality development project with significant upside potential located in a country where we have had extensive experience and success, and maintain a strategic and competitive operating advantage,” said J. Paul Rollinson, President and Chief Executive Officer. “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.”
The deposit has highly continuous mineralization open along strike and at depth, with the potential for additional high-grade structures within the resource. There are multiple promising satellite targets within the under-explored approximately 120 square kilometre license.
The transaction is expected to close by early 2020. For more information, see our news release and investor presentation.
* Mineral resource estimate is classified in accordance with the Canadian Institute of Mining, Metallurgy and Petroleum’s “CIM Definition Standards — For Mineral Resources and Mineral Reserves” incorporated by reference into National Instrument 43-101 “Standards of Disclosure for Mineral Projects”. Mineral resource estimate is based on an internal block model and assumed a constrained pit using a $1,400 per ounce gold price and cut-off grade of 0.35 g/t.
A trial mining pit at Chulbatkan
Trial scale ADR and heap leach pad
