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21 Jan, 2010 09:50

Kinross boosts Russian gold presence with Chukotka buy

Kinross boosts Russian gold presence with Chukotka buy

Canada based Kinross Gold has announced that it has agreed in principle to acquire the Dvoinoye gold deposit and the Vodorazdelnaya gold property in Russia’s Chukotka region for $368 million in cash and shares.

The Dvoinoye deposit has an open pit mine which currently operates for 6 months per year with a throughput of 250 tonnes per day. Kinross plans to enlarge the mine with underground operations and transport or 90 kilometres to its existing Kupol mill.

The 922 square kilometers Vodorazdelnaya property, in the same region, comes with an exploration and mining license.

Kinross CEO, Tye Burt, says the acquisition will boost throughput at the mill with high quality ore and add significantly to the exploration potential in a Russian region the company has operated in for some time.

“This acquisition is a valuable addition to a world-class asset, which will allow us to bring additional high-grade resources to existing facilities. It also gives us additional opportunities for exploration in a highly prospective and mining-friendly district where we have operated for a number of years.”

The purchase will see the buyout of participatory interests in Northern Gold LLC and Regionruda LLC, the owners of the Dvoinoye and Vodorazdelnaya exploration and mining licenses. Northern Gold said it has completed a 30,000 meter infill drilling campaign last year and has submitted an update reserve to Russian authorities. After the deal closes, Kinross intends to begin permitting and feasibility work including engineering and baseline studies.

The total purchase price of $368 million, comprises $165 million in cash with approximately 10.56 million newly issued Kinross shares.  The selling entities, who are related to Millhouse LLC, have expressed their intention to remain shareholders of Kinross for the foreseeable future.