Kinross Gold Corp. has completed its previously disclosed acquisition of Chulbatkan, a high-quality, heap-leach development project in Russia, from N-Mining Ltd. for total fixed consideration of $283 million.

The company has now commenced a comprehensive exploration drilling program at Chulbatkan with the view to updating the current resource base at year-end 2020. Kinross expects to spend approximately $10 million on initial exploration drilling at Chulbatkan during the year. The company is also planning to convert estimated mineral resources to estimated mineral reserves, complete prefeasibility and feasibility studies for the project within approximately three years, and is targeting a subsequent two-year construction period.

On October 18, the company received a timely anti-monopoly approval on the acquisition from the Russian regulators. All other conditions precedent regarding the acquisition have been satisfied.

Chulbatkan is a relatively high-grade, open-pit, heap leachable project and is expected to have significant upside potential. The Chulbatkan deposit is near surface with highly continuous mineralization and is open along strike and at depth with potential for additional high-grade structures. Based on substantial due diligence work and internal analysis, Kinross currently estimates approximately 3.9 million gold ounces in indicated mineral resources and 80,000 gold ounces in estimated inferred mineral resources for the project. The footprint of the current Chulbatkan resource represents less than 1% of the total 120-sq-km license area, which hosts multiple, untested high-quality targets.

In accordance with the acquisition agreement, the first installment of $141.5 million, plus $3.1 million of ordinary course working capital adjustments, representing approximately 50% of the $283 million purchase price, were paid. The agreement was amended to permit the first installment to be paid all in cash, which has minimized share dilution and leveraged the company’s strong liquidity profile. The amendment also provides that 60%, and at Kinross’ sole discretion up to 100%, of the second and final installment of $141.5 million, due on the first anniversary of closing, may be paid in Kinross shares.

Chulbatkan is located in the Khabarovsk region of Far East Russia, approximately the same distance from the company’s regional office in Magadan as its existing Kupol and Dvoinoye operations. The acquisition is expected to build on Kinross’ extensive operational and development experience and successful 25-year track record in Russia.