Kinross announces sale of Russian assets

Rhea-AI Summary

Kinross Gold Corporation (KGC) has entered into a definitive agreement to sell its Russian assets to Highland Gold Mining for $680 million in cash. The deal includes $400 million for the Kupol mine, with payments structured over the next few years, and $280 million for the Udinsk project. The deferred payments are secured by a comprehensive package of guarantees. The transaction is pending approval from the Russian government. This move is significant as it marks Kinross's exit from Russia amidst ongoing geopolitical tensions.

Positive

• Total consideration for the sale of Russian assets is $680 million.
• Deferred payments for assets include structured cash inflows up to $400 million for Kupol and $280 million for Udinsk.
• Payments are secured by share pledges, financial guarantees, and an escrow account.

Negative

• Transaction is subject to approval from the Russian government, which may introduce delays or uncertainties.

(All dollar amounts are expressed in U.S. dollars, unless otherwise noted.)

TORONTO, April 05, 2022 (GLOBE NEWSWIRE) -- Kinross Gold Corporation (TSX:K; NYSE:KGC) (“Kinross”) announced today that it has entered into a definitive agreement (“Agreement”) with the Highland Gold Mining group of companies (“Highland Gold”) and its affiliates to sell 100% of its Russian assets for total consideration of $680 million in cash.

As part of the transaction, Kinross will receive a total of $400 million in cash for the Kupol mine and the surrounding exploration licenses, which includes payment of $100 million upon closing, as well as additional payments of $150 million before the end of 2023, $100 million before the end of 2024, and $50 million before the end of 2025. Kinross will also receive a total of $280 million in cash for its Udinsk project, which includes payments of $80 million before the end of 2025, $100 million before the end of 2026, and $100 million before the end of 2027.

The deferred payments are secured by an extensive security package that includes share pledges, financial guarantees and an escrow account. All payments under the Agreement are payable in U.S. dollars.  

Highland Gold is one of the largest gold mining companies in Russia and operates several mines in the country, including in the Chukotka and Khabarovsk regions where the Kupol mine and Udinsk project are located, respectively.

The transaction is subject to the approval of the Russian government and the finalization of certain ancillary agreements.

About Kinross Gold Corporation

Kinross is a Canadian-based senior gold mining company with mines and projects in the United States, Brazil, Russia, Mauritania, Chile, Ghana and Canada. Our focus is on delivering value based on the core principles of operational excellence, balance sheet strength, disciplined growth and responsible mining. Kinross maintains listings on the Toronto Stock Exchange (symbol:K) and the New York Stock Exchange (symbol:KGC).

Media Contact
Louie Diaz
Vice-President, Corporate Communications
phone: 416-369-6469
louie.diaz@kinross.com

Investor Relations Contact
Chris Lichtenheldt       
Vice-President, Investor Relations  
phone: 416-365-2761  
chris.lichtenheldt@kinross.com

Cautionary statements on forward-looking information

All statements, other than statements of historical fact, contained in this news release, including any information as to the future financial or operating performance of Kinross, constitute “forward-looking information” or “forward-looking statements” within the meaning of certain securities laws, including the provisions of the Securities Act (Ontario) and the “safe harbor” provisions under the United States Private Securities Litigation Reform Act of 1995 and are based on the expectations, estimates and projections of management as of the date of this news release, unless otherwise stated. Forward-looking statements contained in this presentation include, without limitation, statements with respect to the completion and timing of the sale of its Russian assets; the schedule of payments in secured instalments over the next five years; and projected timing of Russian government approvals. Phrases or statements that certain actions, events or results may, could, should or will be achieved, received or taken, or will occur or result and similar such expressions identify forward-looking statements. Forward-looking statements are, necessarily, based upon a number of estimates and assumptions that, while considered reasonable by Kinross as of the date of such statements, are inherently subject to significant business, economic and competitive uncertainties and contingencies. The estimates and assumptions of Kinross contained in this news release, which may prove to be incorrect, include, but are not limited to: (i) that the parties will complete the acquisition in accordance with, and on the timeline contemplated by, the terms and conditions of the relevant agreements, on a basis consistent with our expectations; (ii) that, in the event any deferred payment is not paid to Kinross, the security package, including share pledges, financial guarantees and an escrow account, will be realized and enforceable in a manner consistent with the Company’s expectations; (iii) that economic and sectoral sanctions (or similar laws) will not adversely impact the transaction or the parties’ ability to discharge their obligations under the transaction agreements, including payment of the purchase price; and (iv) that the necessary approvals from the applicable Russian government authorities will be obtained in a timely manner, or at all. There can be no assurance that forward-looking statements will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements, including the risk that the sale transaction will not be completed for any reason and that the secured installment payments are actually paid to Kinross. Forward-looking statements are provided for the purpose of providing information about management’s expectations and plans relating to the future. All of the forward-looking statements made in this news release are qualified by this cautionary statement and those made in our other filings with the securities regulators of Canada and the United States including, but not limited to, the cautionary statements made in the “Risk Analysis” section of our MD&A for the year ended December 31, 2021 and the Annual Information Form dated March 31, 2022. These factors are not intended to represent a complete list of the factors that could affect Kinross. Kinross disclaims any intention or obligation to update or revise any forward-looking statements or to explain any material difference between subsequent actual events and such forward-looking statements, except to the extent required by applicable law.

Source: Kinross Gold Corporation

FAQ

What is the total consideration for Kinross Gold's sale of Russian assets?

Kinross Gold is selling its Russian assets for a total of $680 million in cash.

What assets are being sold by Kinross Gold to Highland Gold Mining?

Kinross is selling the Kupol mine and the Udinsk project as part of the transaction.

How is the payment structured for the sale of Russian assets by Kinross Gold?

Payments include $400 million for Kupol, with installments due by 2025, and $280 million for Udinsk through 2027.

What approvals are needed for Kinross Gold's asset sale to proceed?

The transaction requires approval from the Russian government.

What security measures are in place for the deferred payments in the Kinross Gold deal?

The deferred payments are secured by share pledges, financial guarantees, and an escrow account.