Kinross sold Russian assets to Sviblov firms for $340 mln, amount halved after review by Russian authorities

MOSCOW. June 15 (Interfax) - Kinross Gold has closed its deal to sell all of its Russian assets to Vladislav Sviblovs Highland Gold Mining.

The Canadian miner said in a press release that the deal was worth $340 million cash: it has already received $300 million and will get a deferred payment of $40 million in a year.

The previously agreed total consideration for the transaction was $680 million, which included a payment of $100 million upon closing, with the remaining $580 million scheduled to be received in annual payments from 2023 through to 2027. The transaction consideration was adjusted by the parties following review by the recently formed Russian Sub-commission on the Control of Foreign Investments, which approved this transaction for a purchase price not exceeding $340 million.

The transaction includes the acquisition of the Kupol and Dvoinoye operating mines in Chukotka, exploration assets including the Chulbatkan project in the Khabarovsk territory as well as associated infrastructure. Kinross acquired Chulbatkan for $283 million less than three years ago.

"Chulbatkan is of course the most important part of the portfolio," Mikhail Leskov, development manager at the Institute of Geotechnologies, told Interfax, commenting on the deal. "A resource potential of more than 100 tonnes of gold, mining by the low-cost open-cast method, straightforward heap leaching, and the ability to build a large enterprise quickly with annual throughout of more than 15 million tonnes of ore make this a very attractive project even now. The potential for considerable growth in resources and reserves make this asset even more attractive," he said.

Kupol and Dvoiniye are becoming depleted and their remaining reserves are not as profitable as they were. "But crucially, production there is established and on a considerable scale, which will have a marked influence on Highland Golds cash flow. Also, given HGMs other projects in Chukotka, in particular plans to develop Kekura, which is not that far from Kupol, it will be possible to streamline and speed up solutions to develop Kekura and process some of its ore at the Kupol recovery plant. This would not only speed up the Kekura development and improve its cost-effectiveness but make developing the remaining reserves at Kupol and Dvonoye more economic," Leskov said.