News Bulletin

Kinross to acquire high-grade deposit near Kupol mine

Thursday, 28 Jan 2010

Kinross Gold Corporation has announced that it has agreed in principle to acquire the high-grade Dvoinoye deposit and the Vodorazdelnaya property, both located approximately 90 km north of Kinross' Kupol operation in the Chukotka region of the Russian Far East. Kinross plans to process ore from Dvoinoye at the existing Kupol mill, pursuant to an ore purchase agreement with Kinross' 75% owned Chukotka Mining and Geological Company, the owner of the Kupol mine.

The Dvoinoye deposit currently hosts an open pit mine which the owner has operated six months per year, with throughput of approximately 250 tonnes per day. Kinross plans to develop the Dvoinoye operation as a larger underground mine, and to transport the ore to the Kupol mill for processing. Kinross will complete the additional work necessary to report a Canadian National Instrument 43-101 ("NI 43-101") compliant mineral resource estimate for the Dvoinoye deposit during 2010. Upon closing, Kinross intends to commence permitting and feasibility work, including engineering and baseline studies.
The Vodorazdelnaya property encompasses approximately 922 square kilometres and includes an exploration and mining licence. Historic work on the property has identified targets for further exploration.

The total purchase price is US$368 million, comprising US$165 million in cash and approximately 10.56 million newly issued Kinross shares (with a market value of US$203 million, as of market close on January 19, 2010). The shares to be issued by Kinross will be subject to a minimum hold period of four months after closing. The transaction will allow Kinross to leverage its existing Kupol facilities, eliminating the need for construction of an additional processing plant, and allow for blending of Kupol ore with higher-grade Dvoinoye ore.

"This acquisition is a valuable addition to a world-class asset, which will allow us to bring additional high-grade resources to existing facilities," said Kinross President and CEO Tye W. Burt. "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. Kinross has demonstrated its strong commitment to responsible mining in Russia at Kupol and we look forward to building on this foundation at Dvoinoye," he added.

The transaction is subject to certain conditions, including satisfactory completion of due diligence by Kinross within sixty days, and various third-party, regulatory, and governmental approvals in Russia, as well as TSX approval and the approval and execution of various agreements. A condition for the closing of the transaction is the successful registration of gold reserves over 50 tonnes (approximately 1,608,000 ounces) and approval of foreign ownership of Dvoinoye as a strategic deposit by the Russian Government, as required under Russian Federation Law No. 57 on the Procedure for Foreign Investment in Companies with Strategic Significance for National Security and Defence, and the Subsoil Law. The transaction is expected to close by the third quarter of 2010, once all closing conditions have been satisfied or waived. The parties have agreed that if transaction completion does not occur within 12 months following execution of the definitive agreements, that such agreements automatically terminate, unless extended by mutual agreement.

Source: Kinross Website January 2010

     

     

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