A day after announcing the sale of its Russian assets, Kinross Gold has entered into an exclusivity agreement with Asante Gold to negotiate the potential sale of all its interests in Ghana, including its 90 per cent interest in the Chirano Gold Mine.
Despite the ongoing negotiations, and the preferential treatment offered Asante Gold, Kinross, however, noted that “there is no guarantee a deal will be reached” with Asante Gold.
Kinross’s Chirano mines in Southwestern Ghana produced 154,668 gold-equivalent ounces in 2021, compared to 166,590 ounces in 2020 and is located South of Asante Gold’s Bibiani gold mine.
Louie Diaz, Kinross Gold’s Vice President of Corporate Communications is cited to have said that: “From time to time, Kinross receives unsolicited proposals regarding its assets, including Chirano, which we will explore for the benefit of our shareholders. While Kinross is in confidential discussions with Asante, there is no guarantee a deal will be reached.”
Asante Gold’s CEO Dave Anthony described the agreement as a potential game changer for the company: “Last year, we picked up Bibiani (gold mine) which is coming online in the third quarter… and then we could bring Chirano into the mix, which could add another significant rate of production to our profile.”
Chirano has been on Asante’s radar for a while because of its location near the company’s assets and because Asante controls some land around it, Anthony said. “We all saw Chirano as being a fabulous asset, we have been interested in the asset for a long time.”
Asante’s Recent Purchase of Resolute’s Bibiani Mine
After acquiring 100% shares in Resolute Mining’s Bibiani gold mine at just $90 million last year, and subsequently undergoing some months of exploration drilling, Asante Gold, in February 2022, offered to sell some shares in order to shore up its working capital.
As part of the buyers, the Ghana Minerals Income and Investment Fund (MIIF) acquired 14,514,286 shares in Asante Gold, representing only 3.5 per cent of shares, going for $20 million.
If the $20 million committed to the purchase of the shares of Asante Gold had been channeled into owning partial interest of the mine during the sale by Resolute Mining, this would have earned the MIIF approximately 22% shares in the Bibiani mine.
Suffice to say that, this was not effected at the time for no other reason than the risky nature of the Bibiani asset since it had been under care and maintenance after acquisition in 2014. However, Asante’s President and CEO, commenting on the purchase of the Bibiani mine from Resolute, acknowledged the upside potential of the mine, saying “Bibiani is a sleeping giant”.
Again, before finally completing the sale of the mine, Resolute had already completed a feasibility study of the mine in July 2018, which demonstrated that, at the time, the Bibiani mine could produce approximately 100,000oz of gold a year over a mine life of ten years. This showed that much of the work had been completed by Resolute.
The CEO of the MIIF, Mr Edward Koranteng, in acquiring these shares of Asante said:
“Bibiani is significantly de-risked, given its past producer status, and will have a production profile between 220,000 to 260,000 oz/year for the next nine years. Bibiani’s all-in sustaining cost (AISC) of less than US$1,000 per ounce is in the lower quartile of comparable operations in Ghana, where the average is circa US$1,250/oz.”
Mr Edward Koranteng
Kinross’ sale of Russian assets
On April 5, 2022, Kinross announced the sale of its Russian assets to Highland Gold Mining for a total of $680 million in cash, a month after suspending its operations in the country due to the ongoing war between Russia and Ukraine.
The company, which has been operating in Russia for about 25 years, is expected to receive $400 million for its Kupol underground mine and the surrounding exploration licences in the country’s Far Eastern region of Chukotka and $280 million in cash for Udinsk, the first project it expected to develop on the Chulbatkan licence, acquired in 2020.
Analysts have described Kinross’s move, which is subject to the Russian government’s approval, as positive, but were wary about the relatively long payment schedule spread evenly over the 2022-2027 period.
The Chirano gold mine began production in October 2005. Its full-year production in 2021 decreased compared to 2020 due to lower grades, Kinross said in its annual report. The mine site exploration program in 2021 added 400,000 oz. Gold of measured and indicated mineral resources, which helped expand its mine life by one year to 2026. Meanwhile, Kinross earmarked $8 million for its operations at Chirano this year.
As of today, April 7, 2022, Kinross Gold is trading at C$7.34 per share. This falls within a 52-week trading range of C$6.32 and C$10.05. The company has around 1.3 billion common shares outstanding for a market capitalisation of C$9.4 billion ($7.49 billion).
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