Kinross Gold Corporation hopes to buy a 25% stake in the Chukotka Mining and Geological Company for $350 million. This will give it full ownership of the Russian mining company and accord it full control of the Kupol gold mine in east Russia. The stake is currently owned by the Chukotka Autonomous Okrug.
This deal will give Kinross Gold access to the Kupol mine as well as the Kupol East West exploration licenses in Chukotka in Russia. It has received the pre approval from the Russia's State Commission for the Control of Foreign Investments for the purchase last month. The deal will be closed by the third quarter of 2011.
The Kupol mine is likely to produce 17% of the gold production for Kinross in 2011 as per figures based on its current 75% stake in the mine. With 100% ownership coming through the figures will go higher. The company intends to pay cash for the deal from the money it received from the sale of its stake in the Harry Winston Diamond Corp along with a $200 million line of credit.
Totonto based Kinross president and CEO Tye Burt said that the acquisition would increase their stake in a high quality asset and increase the gold production. It would also strengthen the position of the Canadian company in Russia which is second in world gold reserves. It would also allow the company to realize the full benefit of their Dvoinoye development.
Kinross is also planning on investing in the Fruita Del Norte project in Ecudor. The mine has a life of 16 years and the company will need to invest $ 1.1 billion till 2016 to extract the 6.8 million ounces of gold and 9.1 ounces of silver in the mineral reserves there.