Kinross Gold buys 70% of proposed open pit Alaska gold mine for $125 million

CALGARY — Kinross Gold Corp. is moving to secure additional supply for its Alaska gold operations by buying a controlling interest in the Peak Gold project from Royal Gold, Inc., and Contango Ore, Inc., for $125 million.

Toronto-based Kinross has agreed to pay Royal Gold about $66 million for its entire 40 per cent stake and $59.6 million for half of Contango’s 60 per cent share, leaving Contango with a minority 30 per cent holding.

The miner says it plans to process ore from the open-pit Peak Gold mine at its existing Fort Knox mine, 400 kilometres to the northwest, to reduce costs and extend the life of the existing mill and infrastructure.

Production at the new project is expected to commence in 2024, with total production of about one million equivalent ounces of gold over 4.5 years at an all-in sustaining cost of about US$750 per ounce.

The initial capital cost of the mine is estimated at $147 million in Canadian dollars.

Earlier this month, Kinross reinstated its dividend after cancelling it seven years ago in view of its growing gold production and recent record high gold prices.

“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,” said Kinross CEO J. Paul Rollinson

This report by The Canadian Press was first published Sept. 30, 2020.

Companies in this story: (TSX:K, OTCQB:CTGO)

The Canadian Press