Kinross Gold Corporation (TSX:K; NYSE:KGC) (“Kinross”) is pleased
to announce today that it has reached an agreement in
principle (“agreement”) with the Government of Mauritania
(“Government”) to enhance the parties’ partnership. The key terms
of the agreement, which remain subject to definitive documentation,
are the culmination of discussions between Kinross and the
Government that balance the interests of both parties. The terms
contemplate reasonable commercial trade-offs intended to provide
certainty and resolution of outstanding matters.
Key terms of
agreement
Under the terms of the agreement, the Government
will provide Kinross with a 30-year exploitation license for
Tasiast Sud under the 2008 Mining Code and the 2012 Mining
Convention, granted with expedited permitting and the possibility
of early mining. The agreement also provides for the reinstatement
of the tax exemption on fuel duties1 and the repayment by the
Government to Kinross of approximately $40 million in outstanding
VAT refunds with an agreed payment schedule through 2025.
Kinross will make a $10 million payment to the
Government after completion of the definitive agreements to resolve
disputed matters related to fuel use and tax exemptions. In
addition, upon receiving the exploitation license for Tasiast Sud,
Kinross will make a $15 million payment to resolve disputed matters
arising out of Kinross’ prior application to convert the Tasiast
Sud exploration license into an exploitation license.
At Tasiast, Kinross has also volunteered to
update its existing fixed 3% royalty payable under the 2006 Tasiast
Mining Convention (the “2006 Convention”). While the 2006
Convention remains in full force and effect for Tasiast, the mining
laws of Mauritania have evolved in a manner that is consistent with
other African mining jurisdictions. Accordingly, Kinross decided it
was appropriate to pay an escalating royalty tied to the price of
gold1 that aligns with the 2008 Mining Code (that replaced the 1999
Mining Code) and the 2012 Mining Convention, and is comparable with
other royalties in the region.
A renewed partnership approach for Tasiast Sud
contemplates the Government receiving a 15% free carried interest
in Tasiast Sud with an option to purchase an additional 10%
participating interest in the project after additional feasibility
work is completed.
The parties have also agreed to enhanced
exploration programs at Tasiast Sud and Kinross-held concessions
north of the current mining area, to the extent achievable in the
current COVID-19 environment. The exploration program at the large,
underexplored and prospective Tasiast Sud property is expected to
focus on upgrading existing indicated resource estimates of 193 Au
koz.2 and inferred resource estimates of 817 Au koz2 and to
potentially enhance the probable reserve estimates of 144 Au
koz.2
The Government will have the right to nominate
two observers to the Board of Directors (“Board”) of the Kinross
subsidiary operating the Tasiast mine and will also have a right to
nominate one representative and one observer to the Board of the
Kinross subsidiary that will operate Tasiast Sud. These changes are
intended to enhance transparency and communication between Tasiast
and the Government.
1 The fuel tax exemptions and updated royalty
structure are effective July 1, 2020.2 See Appendix with full
assumptions related to Tasiast Sud’s mineral reserve and resource
estimates.
J. Paul Rollinson, Kinross President and
CEO, commented on the agreement: “We are pleased to see
further development of a positive foreign investment climate in
Mauritania with this successful outcome of our discussions with the
Government, along with the IFC-led Tasiast project financing signed
in December 2019. This balanced agreement will deliver increased
stability, position Tasiast for long-term success, and provide
enhanced benefits to Mauritania and its people.”
Mohamed Abdel Vetah, Mauritanian
Minister of Petroleum, Mines and Energy, commented on the
agreement: “This agreement is a result of positive efforts between
the Government of Mauritania and Kinross to amicably resolve our
discussions. It also highlights our commitment to providing an
attractive investment climate in the country and ensures that the
Mauritanian people will receive the appropriate benefits from the
Tasiast mine. Tasiast is an important contributor to Mauritania and
we believe our new agreement will be a positive model for other
foreign mining investors. We are pleased that our longstanding and
important partnership with Kinross has been strengthened, and we
welcome the continued investment in our country and contributions
to its socio-economic development.”
Updated royalty structure to
align with current laws
The Company believes that voluntarily updating
the royalty structure for Tasiast so that it aligns with
Mauritania’s current mining conventions and codes will strengthen
the foundation for long-term stability and further align interests
by ensuring the country receives an appropriate share of economic
benefits from the Tasiast mine.
Gold price |
Percentage point increase above the 3%
2006 Convention royalty |
Total Tasiast royalty (including existing 3%
royalty) |
Below $1,000/oz. |
1.0 |
% |
4.0 |
% |
$1,000 – $1,199/oz. |
1.5 |
% |
4.5 |
% |
$1,200 – $1,399/oz. |
2.0 |
% |
5.0 |
% |
$1,400 – $1,599/oz. |
2.5 |
% |
5.5 |
% |
$1,600 – $1,799/oz. |
3.0 |
% |
6.0 |
% |
$1,800/oz. and above |
3.5 |
% |
6.5 |
% |
For more information on the
agreement:
https://www.kinross.com/files/doc_presentations/2020/06/Terms-Reached-with-the-Government-of-Mauritania.pdf
Generating value through
responsible mining
From 2010 - 2019, Kinross has contributed
approximately $3 billion to Mauritania’s economy, supporting the
country’s economic growth through taxes, procurement, community
programs and wages. From 2013 - 2019, Kinross has also invested
more than $30 million in training and capacity building as part of
a long-term strategy to grow local content. In 2019, 95% of the
employees of the mine were Mauritanian and the Company intends to
increase the number of Mauritanians in management positions.
Kinross continues to put a priority on using in-county suppliers,
and in 2019, the Company conducted business with more than 235
Mauritanian suppliers.
Consistent with its approach across all
operations, Kinross works closely with local communities near
Tasiast to understand and support local development initiatives.
Since 2010, the Company has spent more than $12 million on local
community programs in areas ranging from health, animal husbandry,
small businesses for women’s groups, infrastructure, and renewable
energy. Development indicators such as poverty, literacy,
employment, quality of housing and access to basic services have
all shown significant improvements in communities around the mine.
Kinross will continue to work closely with communities and
authorities to realize the positive development outcomes related to
responsible mining.
About Kinross Gold
Corporation
Kinross is a Canadian-based senior gold mining
company with mines and projects in the United States, Brazil,
Russia, Mauritania, Chile and Ghana. Kinross’ focus is on
delivering value based on the core principles of operational
excellence, balance sheet strength, disciplined growth and
responsible mining. Kinross maintains listings on the Toronto Stock
Exchange (symbol:K) and the New York Stock Exchange
(symbol:KGC).
Media Contact Louie DiazSenior
Director, Corporate Communicationsphone: 416-369-6469
louie.diaz@kinross.com
Investor Relations ContactTom
Elliott
Senior Vice-President, Investor Relations and Corporate
Development
phone:
416-365-3390
tom.elliott@kinross.com
Cautionary statement on forward-looking
information
All statements, other than statements of
historical fact, contained in this news release, including any
information as to the future financial or operating performance of
Kinross, constitute “forward-looking information” or
“forward-looking statements” within the meaning of certain
securities laws, including the provisions of the Securities Act
(Ontario) and the “safe harbor” provisions under the United States
Private Securities Litigation Reform Act of 1995 and are based on
the expectations, estimates and projections of management as of the
date of this news release, unless otherwise stated. The words
“anticipate”, “believe”, “continue”, “expect”, “focus”, “forecast”,
“intend”, “offer”, “option”,
“outlook”, “potential”, “priority”, “will” or variations
of or similar such words and phrases or statements that certain
actions, events or results may, could, should or will be achieved,
received or taken, or will occur or result and similar such
expressions identify forward-looking statements. Forward-looking
statements are, necessarily, based upon a number of estimates and
assumptions that, while considered reasonable by Kinross as of the
date of such statements, are inherently subject to significant
business, economic and competitive uncertainties and contingencies.
The estimates and assumptions of Kinross contained in this news
release, which may prove to be incorrect, include, but are not
limited to: (i) that the parties will enter into definitive
documentation in accordance with, and on the timeline contemplated
by, the terms and conditions of the term sheet, on a basis
consistent with our expectations and that the parties will perform
their respective obligations thereunder on the timelines agreed;
(ii) that the exploitation permit for Tasiast Sud will be issued on
timelines consistent with our expectations; (iii) that the benefits
of the contemplated arrangements will result in increased stability
at the Company’s operations in Mauritania; (iv) the accuracy of the
mineral reserve and mineral resource estimates (including but not
limited to ore tonnage and ore grade estimates); (v) the potential
for long-term success at Tasiast; (vi) the terms and conditions of
the existing mining convention being interpreted and applied in a
manner consistent with its intent and our expectations and without
material amendment or formal dispute (including without limitation
the application of tax, customs and duties exemptions and
royalties); (vii) the ability to conduct enhanced exploration at
Tasiast Sud and other Kinross-held concessions; (viii) the effect
of changes designed to enhance transparency in the relationship
between Kinross and the Government; and (ix) that other disputes
between Kinross and the Government will not arise relating to
unresolved or other matters. There can be no assurance that
forward-looking statements will prove to be accurate, as actual
results and future events could differ materially from those
anticipated in such statements. Forward-looking statements are
provided for the purpose of providing information about
management’s expectations and plans relating to the future. All of
the forward-looking statements made in this news release are
qualified by this cautionary statement and those made in our other
filings with the securities regulators of Canada and the United
States including, but not limited to, the cautionary statements
made in the “Risk Analysis” section of our MD&A for the year
ended December 31, 2019 and the Annual Information Form dated March
30, 2020. These factors are not intended to represent a complete
list of the factors that could affect Kinross. Kinross disclaims
any intention or obligation to update or revise any forward-looking
statements or to explain any material difference between subsequent
actual events and such forward-looking statements, except to the
extent required by applicable law.
Other information
Where we say "we", "us", "our", the "Company", or "Kinross" in
this news release, we mean Kinross Gold Corporation and/or one or
more or all of its subsidiaries, as may be applicable.
Appendix: Tasiast Sud Mineral Reserve and
Resource Estimates
|
Tonnes(kt) |
Grade(g/t) |
Ounces(Au koz.) |
Probable Reserves |
2,231 |
2.0 |
144 |
Indicated Resources |
5,840 |
1.0 |
193 |
Inferred Resources |
35,784 |
0.7 |
817 |
The mineral resource and mineral reserve
estimates for Tasiast Sud do not contemplate the escalated royalty
structure included in the term sheet signed with the Government of
Mauritania.
Kinross Mineral Reserve and
Resource Statements Notes
(1) Unless otherwise noted, the Company’s
mineral reserves are estimated using appropriate cut-off grades
based on an assumed gold price of $1,200 per ounce. Mineral
reserves are estimated using appropriate process recoveries,
operating costs and mine plans that are unique to each property and
include estimated allowances for dilution and mining recovery.
Mineral reserve estimates are reported in contained units and are
estimated based on the following foreign exchange rates:
Mauritanian Ouguiya to $35
(2) Unless otherwise noted, the Company’s
mineral resources are estimated using appropriate cut-off grades
based on a gold price of $1,400 per ounce. Foreign exchange rates
for estimating mineral resources were the same as for mineral
reserves.
(3) The Company’s mineral reserve and mineral
resource estimates as at December 31, 2019 are classified in
accordance with the Canadian Institute of Mining, Metallurgy and
Petroleum (“CIM”) “CIM Definition Standards - For Mineral Resources
and Mineral Reserves” adopted by the CIM Council (as amended, the
“CIM Definition Standards”) in accordance with the requirements of
National Instrument 43-101 “Standards of Disclosure for Mineral
Projects” (“NI 43-101”). Mineral reserve and mineral resource
estimates reflect the Company's reasonable expectation that all
necessary permits and approvals will be obtained and
maintained.
(4) Cautionary note to U.S. Investors concerning
estimates of mineral reserves and mineral resources. These
estimates have been prepared in accordance with the requirements of
Canadian securities laws, which differ from the requirements of
United States’ securities laws. The terms “mineral reserve”,
“proven mineral reserve”, “probable mineral reserve”,
“mineral resource”, “measured mineral resource”, “indicated mineral
resource” and “inferred mineral resource” are Canadian mining terms
as defined in accordance with NI 43-101 and the CIM Definition
Standards. These definitions differ materially from the definitions
in the United States Securities and Exchange Commission
(“SEC”) SEC Industry Guide 7 under the United
States Securities Act of 1933, as amended. Under SEC Industry Guide
7, a “final” or “bankable” feasibility study is required to report
mineral reserves, the three-year historical average price is used
in any mineral reserve or cash flow analysis to designate mineral
reserves and the primary environmental analysis or report must be
filed with the appropriate governmental authority. In addition, the
terms “mineral resource”, “measured mineral resource”, “indicated
mineral resource” and “inferred mineral resource” are defined in NI
43-101 and recognized by Canadian securities laws but are not
defined terms under SEC Industry Guide 7 and are normally not
permitted to be used in reports and registration statements filed
with the SEC. U.S. investors are cautioned not to assume that any
part or all of mineral deposits in these categories will ever be
upgraded to SEC Industry Guide 7 mineral reserves. “Inferred
mineral resources” have a great amount of uncertainty as to their
existence, and great uncertainty as to their economic and legal
feasibility. It cannot be assumed that all or any part of an
“inferred mineral resource” will ever by upgraded to a higher
category. Under Canadian securities laws, estimates of “inferred
mineral resources” may not form the basis of feasibility or
pre-feasibility studies, except in rare cases. U.S. investors are
cautioned not to assume that all or any part of an inferred mineral
resource exists or is economically or legally mineable.
The SEC has adopted amendments to its disclosure
rules to modernize the mineral property disclosure requirements for
issuers whose securities are registered with the SEC under the
Securities Exchange Act of 1934 (“Exchange Act”). These amendments
became effective February 25, 2019 (the “SEC Modernization Rules”)
and, following a two-year transition period, the SEC Modernization
Rules will replace the historical property disclosure requirements
for mining registrants that were included in SEC Industry Guide 7.
Following the transition period, as a foreign private issuer that
files its annual report on Form 40-F with the SEC pursuant to the
multi-jurisdictional disclosure system, the Company is not required
to provide disclosure on its mineral properties under the SEC
Modernization Rules and will continue to provide disclosure under
NI 43-101 and the CIM Definition Standards. If the Company ceases
to be a foreign private issuer or lose its eligibility to file its
annual report on Form 40-F pursuant to the multi-jurisdictional
disclosure system, then the Company will be subject to the SEC
Modernization Rules which differ from the requirements of NI 43-101
and the CIM Definition Standards. The SEC Modernization Rules
include the adoption of terms describing mineral reserves and
mineral resources that are “substantially similar” to the
corresponding terms under the CIM Definition Standards. As a result
of the adoption of the SEC Modernization Rules, the SEC now
recognizes estimates of “measured mineral resources”, “indicated
mineral resources” and “inferred mineral resources”. In addition,
the SEC has amended its definitions of “proven mineral reserves”
and “probable mineral reserves” to be “substantially similar” to
the corresponding CIM Definitions. U.S. investors are cautioned
that while the above terms are “substantially similar” to CIM
Definitions, there are differences in the definitions under the SEC
Modernization Rules and the CIM Definition Standards. Accordingly,
there is no assurance any mineral reserves or mineral resources
that the Company may report as “proven mineral reserves”, “probable
mineral reserves”, “measured mineral resources”, “indicated mineral
resources” and “inferred mineral resources” under NI 43-101 would
be the same had the Company prepared the reserve or resource
estimates under the standards adopted under the SEC Modernization
Rules. U.S. investors are also cautioned that while the SEC will
now recognize “measured mineral resources”, “indicated mineral
resources” and “inferred mineral resources”, investors should not
assume that any part or all of the mineralization in these
categories will ever be converted into a higher category of mineral
resources or into mineral reserves. Mineralization described using
these terms has a greater amount of uncertainty as to its existence
and feasibility than mineralization that has been characterized as
reserves. Accordingly, investors are cautioned not to assume that
any measured mineral resources, indicated mineral resources, or
inferred mineral resources that the Company reports are or will be
economically or legally mineable. Further, “inferred mineral
resources” have a greater amount of uncertainty as to their
existence and as to whether they can be mined legally or
economically. Therefore, U.S. investors are also cautioned not to
assume that all or any part of the “inferred mineral resources”
exist. Under Canadian securities laws, estimates of “inferred
mineral resources” may not form the basis of feasibility or
pre-feasibility studies, except in rare cases.
For the above reasons, the mineral reserve and
mineral resource estimates and related information in this
presentation may not be comparable to similar information made
public by U.S. companies subject to the reporting and disclosure
requirements under the United States federal securities laws and
the rules and regulations thereunder.
(5) The Company's mineral resource and mineral
reserve estimates were prepared under the supervision of and
verified by Mr. John Sims, an officer of Kinross, who is a
qualified person as defined by NI 43-101.
(6) The Company’s normal data verification
procedures have been used in collecting, compiling, interpreting
and processing the data used to estimate mineral reserves and
mineral resources. Independent data verification has not been
performed.
(7) Mineral resources that are not mineral
reserves do not have to demonstrate economic viability. Mineral
resources are subject to infill drilling, permitting, mine
planning, mining dilution and recovery losses, among other things,
to be converted into mineral reserves. Due to the uncertainty
associated with inferred mineral resources, it cannot be assumed
that all or any part of an inferred mineral resource will ever be
upgraded to indicated or measured mineral resources, including as a
result of continued exploration.
(8) The mineral resource and mineral reserve
estimates for Tasiast Sud do not contemplate the escalated royalty
structure contemplated by the term sheet signed with the Government
of Mauritania.
Source: Kinross Gold Corporation
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