- (All dollar amounts are expressed in U.S. dollars, unless otherwise noted.)
TORONTO, June 15, 2020 (GLOBE NEWSWIRE) -- 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.
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).
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