Kinross Gold Corporation. - CEO, J Paul Rollinson
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  • Mining giant Kinross Gold (K) is set to acquire a 70 per cent stake in the Peak Gold Project in Alaska for a total of C$93.7 million
  • The deal was signed with Royal Gold and Contango, whereby Kinross will operate the project with Contango holding the remaining 30 per cent non-operating interest
  • Production is expected to begin in 2024 with an output of roughly one million gold equivalent ounces over 4.5 years
  • The project has a number of exploration targets within the 675,000-acre land package, offering the potential to extend the overall mine life
  • Kinross Gold (K) is currently down 2.97 per cent and is trading at $11.60 per share

Kinross Gold (K) is set to acquire a 70 per cent stake in the Peak Gold Project in Alaska for C$93.7 million.

Located near Tok in the southeast portion of the US state, the project sits within a 675,000-acre mineral lease and hosts a high-grade skarn deposit that extends to the surface.

40 per cent of the Peak Gold Project is held by Royal Alaska, a subsidiary of Royal Gold, while the remaining 60 per cent is held by CORE Alaska, a subsidiary of Contango.

Under the terms of the deal, Kinross will acquire Royal Gold’s 40 per cent stake for $49.2 million, along with half of Contango’s interest for $44.5 million.

Following completion of the transaction, which is expected to close on October 1, 2020, Kinross will act as the operator of the project while Contango will hold the remaining 30 per cent non-operating minority interest.

J. Paul Rollinson, President and CEO of Kinross Gold, said the acquisition presents an attractive, high-margin opportunity that is expected to generate robust returns, particularly within the current gold price environment.

“The relatively high-grade, low-cost Peak Gold Project is an excellent addition to our portfolio, as it allows us to leverage our existing mill and infrastructure at Fort Knox and strengthens our medium-term production and cash flow profile,” he added.

Based on a preliminary economic assessment published in 2018, the Peak Gold Project has an estimated measured and indicated mineral resource of roughly 1.2 million ounces of gold at a grade of 4.1 grams per tonne.

Production is expected to begin in 2024, with a total output of roughly one million ounces of gold equivalent over 4.5 years at an average grade of six grams per tonne.

According to a preliminary mine plan, which includes crushing ore at the open pit project and trucking the material to Fort Knox’s mill for processing, Kinross will be able to avoid costs associated with the construction of any further infrastructure.

The company also intends to blend Peak Gold’s higher grade ore with that of Fort Know’s lower grades, which is expected to extend the mill’s operating life and reduce Fort Knox’s all-in sustaining costs by approximately $70 per ounce.

Kinross Gold (K) is currently down 2.97 per cent and is trading at $11.60 per share at 10:24am EDT.

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