KINROSS Gold has added to its proposed Russian mine divestments with an agreement to sell its 90% stake in the Chirano operation in Ghana for $225m in shares and cash. Chirano produces about 165,000 ounces of gold annually for the Canadian miner
Chirano’s buyer Asante Gold is to pay Kinross Gold $115m in cash and up to $50m in shares provided an ownership limit of 9.9% is not breached. If the $50m in share purchases buys more than this stake, Asante has agreed that the excess will be paid over and above $60m agreed in terms of addtitional deferred cash payments.
The deferred cash payments will be paid over two years with the first half to be paid on the first anniversary of the deal and the balance a year later.
Kinross Gold has agreed not to sell its Asante Gold shares for a year following completion of the deal. The Ghanaian government – which has a 10% stake in Chirano – has issued “a letter of no objection” to the proposed transaction.
Kinross said it expected to complete the transaction at the end of May.
Chirano represents about 3% of Kinross’ total mineral reserve estimates as of its 2021 financial year end. Kinross recently extended Chirano’s mine life three years after adding 660,000 oz to the mine’s mineral reserves estimates before depletion.
Kinross said it expected to update its 2022 and three-year production guidance following the announcement of the asset sales. It would also “… provide additional commentary regarding the sale transactions”.
Kinross said earlier this month it would sell its Kupol and Udinsk mines in Russia for a combined $680m to Highland Gold Mining following the invasion of Ukraine in February this year. It earlier announced it would suspend production at the mines.
The deal is subject to Russian government approval and the completion of ancillary agreements “which is a potentially significant hurdle,” National Bank Financial analyst Mike Parkin said in a note cited by Bloomberg News. Still, the deal is “fair to good value given the circumstances,” he said.
