Kinross Gold poised to sell its Russian assets
Kinross Gold Corp. (K-TSX, KGC-NYSE) said it has been developing a transition plan to divest of its Russian assets. The company said it has received a number of unsolicited proposals regarding the Russian business and is now in exclusive negotiations with a third-party mining company regarding a potential sale of 100% of its assets in that country.
“Any such divestiture or change of control would be subject to Russian government approval,” the company said in a press release that came after the close of trading on March 29, 2022 when the shares rose 2.9% to $7.19.
The shares are currently trading in a 52-week range of $10.55 and $6.32.
News of the divestment plan comes just weeks after Kinross responded to the war in Ukraine and subsequent U.S. sanctions by suspending operations in Russia that currently account for 13% of its global gold production.
Kinross is a Canadian senior gold mining company with mines and projects in the U.S., Brazil, Russia, Mauritania, Chile, Ghana and Canada.
Kinross operates the underground Kupol mine in the Chukotka region of Russia. Ore stockpiles from the Dvoinoye operation, where mining activities ceased in 2020, are processed at the Kupol mill. Russian production amounted to 511,000 ounces of gold equivalent in 2020.
The Udinsk project in Khabarovski Krai, is currently in the feasibility study stage.
The company said it has successfully operated in Russia for more than 25 years and has previously managed through similar situations while complying with applicable laws.
As part of the exclusivity agreement and to properly maintain assets pending a change of control, Kinross said its Russian subsidiaries are continuing to operate during the transition period.
“Kinross will also continue to manage and mitigate the environmental impacts of its operations,” the company said. This includes overseeing monitoring systems and transporting industrial materials to the Kupol mine that are not permitted to remain at the port to maintain safety and regulatory compliance.
The company said it will also continue to prioritize the well-being of its more than 2,000 employees in Russia as it develops a transition plan.
Meanwhile, the parent company will not benefit financially from the operations while the transition plan is finalized. Current activities will be funded through resources already in the country, with no additional investment required by the parent company.
Kinross has diversified procurement and logistics structures in Russia, with the majority of its procurement coming from within the country. “Approximately 98% of employees of Kinross’s Russian subsidiaries are Russian locals, and given the ice road supply season, its operations have a full year of supplies on hand,” the company has said.
Kinross said it refines gold production from its Russian mines in country and retains flexibility to sell its gold domestically and internationally. In 2022, Kinross expects approximately 13% of its global production to come from Russia. The company’s operations are located in the Russian Far East and are approximately 7,000 kilometres away from Ukraine.