- Write by:
-
Thursday, June 16, 2022 - 14:27:47
-
809 Visit
-
Print
Mining News Pro - Kinross Gold said on Wednesday it had sold its Kupol mine and Udinsk project in Russia to Highland Gold Mining for a total of $340 million in cash, half of the price announced in April.
The Canadian miner suspended operations in Russia in early March to both comply with Western sanctions against Moscow over its invasion of Ukraine and avoid reputational damage by staying in the country.
Kinross, which operated in the federation for about 25 years, said the price adjustment followed a review by the recently formed Russian sub-commission on the Control of Foreign Investments.
In addition to $340 million in cash, it will also receive a deferred payment of $40 million on the one-year anniversary of closing.
Country authorities in March said that any transaction between Russians and foreign counterparties required permission from the commission, to ensure decisions to exit were not driven by political pressure.
The assets sold to Highland Gold, one of the Russia’s largest bullion miners, were the Kupol underground mine and the surrounding exploration licenses in the country’s Far Eastern region of Chukotka, about 7,000 kilometres from Ukraine.
It also included Udinsk, the first project Kinross expected to develop on the Chulbatkan licence, acquired in 2020. Kinross had envisioned beginning production at the pit in 2025.
“We view this announcement as mildly positive as Kinross has finally exited Russia with $300 million in cash today (the market had been concerned that KGC would not receive any cash), with only a small deferred portion for next year,” Scotiabank said on Wednesday.
BMO’s analyst Jackie Przybylowski also qualified the sale as positive. “Although the total sale price is less than previously disclosed, this includes a higher amount of up-front cash,” she wrote in a note to investors.
“We now expect the company to be fully funded through to 2026 at our current growth forecasts and commodity estimates – previously, if we had only assumed an up-front $100M payment was made on the Russia assets, Kinross would have been required to raise capital in late 2024,” Przybylowski noted.
Leaning on Tasiast and Paracatu
“After the completed divestment of our Russian business, Kinross’ rebalanced portfolio maintains a substantial production outlook anchored by its two tier one assets – Tasiast and Paracatu – as well as a strong portfolio of mines in the Americas, a growing business in Chile, and the large, world-class Great Bear project in Canada,” CEO Paul Rollinson said in the statement.
Before Moscow’s invasion of Ukraine, Kinross had forecasted that about 13% of its global production would come from its operations in the country.
Analysts had described Kinross’s move as positive, but were wary about the relatively long payment schedule spread evenly over the 2022-2027 period.
“We note that a heavily staggered payment plan mutes the immediate benefits to Kinross,” Jackie Przybylowski, a BMO analyst, wrote in a research note to clients on April 5.
Highland Gold is one of the largest gold producers in Russia, with a portfolio of assets located in four mining regions — Chita, Kamchatka, Chukotka and Khabarovsk. The company is also commissioning the Ozernoe mine in Buryatia.
The transaction is the first sale of a Western company’s assets in Russia since the start of the war in Ukraine.
Short Link:
https://www.miningnews.ir/En/News/621555
South African diversified miner Sibanye Stillwater is discussing with lenders to temporarily lift limits on borrowings, ...
Africa-focused Montage Gold announced Thursday it has received a ministerial order granting all environmental approvals ...
Newmont Corp. has no plans to expedite a decision on its $2.5 billion Yanacocha Sulfides project, dashing the Peruvian ...
China’s central bank added 60,000 troy ounces of gold to its reserves in April, official data showed on Tuesday, ...
Gold rose after mixed signals from the US, where optimism is growing the economy is on target for a soft landing as the ...
Executives from Saudi Arabian mining company Manara Minerals are in Islamabad to continue talks about buying a stake in ...
Harmony Gold said on Thursday an employee working on planned rail maintenance had died at its Mponeng mine in South ...
Emerging North American gold producer Contango ORE is boosting its landhold in Alaska with the acquisition of Canada’s ...
Gold fell, with market watchers saying the previous day’s rally in response to Federal Reserve Chair Jerome Powell’s ...
No comments have been posted yet ...