Kinross Gold Completes Sale Of Interest In Chile Projects
Zacks Investment Research | Jun 12, 2017 10:36PM ET
Kinross Gold Corporation (NYSE:KGC) announced the completion of the sale of its 25% interest in the Cerro Casale project and its full interest in the Quebrada Seca exploration project located adjacent to Cerro Casale to Goldcorp Inc. (NYSE:GG) . Both the projects are located in Chile.
The considerations for the transaction include payment of $260 million in cash, which was paid at the closure of the deal (including $20 million for Quebrada Seca) and contingent payment of $40 million in cash, payable following a construction decision for Cerro Casale.
Goldcorp also assumed a $20 million contingent payment obligation under the existing Cerro Casale shareholders agreement, which is payable when commercial production at Cerro Casale starts. The consideration also includes a 1.25% royalty from Goldcorp based on 25% of gross revenues from all metals sold at Quebrada Seca and Cerro Casale, with Kinross foregoing the first $10 million.
Kinross also entered into water supply agreement with the Cerro Casale joint venture. Kinross has the rights to access the unused water from the Cerro Casale deposits. The company intends to use this water for its Chilean assets. Kinross will be responsible for the incremental capital costs to accommodate the supply of water along with its pro rata share of operating and maintenance costs.
The company expects to utilize the proceeds from the interest sale for its organic development projects and to reinforce its balance sheet.
Kinross’ shares have rallied around 30.7% over the past three months, outperforming the Zacks categorized Zacks Investment Research
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