Buckhorn will contribute to production increases
All dollar amounts are expressed in U.S. dollars, unless otherwise stated
TORONTO, Feb. 27 /CNW/ - Kinross Gold Corporation (TSX-K; NYSE-KGC)
("Kinross") has agreed to extend the termination date to acquire Crown
Resources Corporation (OTCBB-CRCE) ("Crown") to December 31, 2006. When
completed, this acquisition will allow Kinross to restart its Kettle River
facilities which, along with the development of Crown's Buckhorn Mountain
project will contribute to Kinross' growing production profile.
Kinross has signed an amendment (the "Amendment") with Crown to extend
the termination date of the definitive acquisition agreement (the "Agreement")
to December 31, 2006 and adjust the price that Kinross will pay to acquire
Crown and its 100 per cent-owned Buckhorn Mountain gold deposit located in
north central Washington State, USA, just 67 kilometres from the Company's
Kettle River mine.
Under the terms of the Amendment, shareholders of Crown will receive
0.32 shares of Kinross for each share of Crown, a decrease of 0.02 over the
previous exchange ratio of 0.34, although the valuation collar has been
removed. Assuming all of the outstanding Crown warrants and options are
converted, a total of approximately 14.7 million common shares of Kinross will
be issued upon the completion of the transaction.
"The acquisition of Crown and its Buckhorn Mountain deposit is an
excellent fit with our growth plan," said Tye Burt, President and Chief
Executive Officer of Kinross Gold Corporation. "Buckhorn's reserves will
represent an important addition to our portfolio. Our existing Kettle River
facilities and experience in the region will allow us to move forward as an
important contributor in the area."
Kinross has also agreed to loan Crown $2 million if the transaction is
not closed by July 1, 2006. The $2 million would be used to buy out the only
existing net smelter return royalty from a third party covering the ore body
at the Buckhorn Mountain property. The loan will have a three-year term and
bear interest at the published (Wall Street Journal) prime rate at the time of
borrowing, plus 3 per cent.
Production Growth Outlook
Assuming the completion of this transaction, Kinross has also released
forecast production numbers for the years 2006 - 2009(1) as follows:
- As previously disclosed in the 2005 third quarter results, in 2006,
Kinross expects to produce approximately 1.44 million gold equivalent
ounces.
- In 2007, Kinross expects to produce between 1.5 million and
1.6 million gold equivalent ounces.
- In 2008, total production is expected to grow to between 1.6 million
and 1.7 million gold equivalent ounces.
- In 2009, total production is expected to grow to between 1.65 million
and 1.75 million gold equivalent ounces.
"Kinross' exciting growth profile is evidence of our strategic objective
of increasing cash flow and net asset value for shareholders," said Burt.
"Kinross is driving forward with growth through the expansion of existing
facilities. We will then use strategic acquisitions to upgrade our portfolio
of mines."
Background to the Crown Transaction
The agreement to acquire Crown was originally announced in November 2003.
Now that Kinross is up-to-date in its financial filings, it has renewed the
agreement on a new timetable. The transaction is subject to regulatory
approvals, a minimum two-thirds approval at a special meeting of Crown
shareholders and other customary closing conditions. Both parties are working
to close the transaction as rapidly as possible.
As at December 31, 2003, Crown had reported total proven and probable
reserves at Buckhorn of approximately 2.8 million tonnes grading 11.1 grams
per tonne gold and inferred mineral resources of approximately 0.3 million
tonnes grading 15.0 grams per tonne gold as reported in the technical report
prepared by SRK Consulting dated December 2003. The technical report
containing information about reserves and resources is compliant with Canadian
National Instrument 43-101, was filed on SEDAR on December 5, 2003 and can be
found under Kinross' profile at www.sedar.com. Please refer to the technical
report for details of the assumptions and qualifications relating to the above
mineral reserve and resource estimates. With the assistance of an independent
consulting engineering firm, Kinross is currently updating the Buckhorn
Mountain reserve and mineralized material estimates.
About Kinross Gold Corporation
Kinross, a world-class gold company based in Canada, has since 1993
become the third largest primary gold producer in North America and the
seventh largest in the world. With nine mines in stable countries including
Canada, the United States, Brazil and Chile, Kinross employs more than 4,000
people worldwide.
Kinross' strong balance sheet and no-gold hedging policy allow us to take
full advantage of increasing cash flow, revenues and profit margins per ounce
of gold. Kinross is focused on a strategic objective to maximize net asset
value and cash flow per share through a four-point plan built on growth from
core operations; expanding capacity for the future; attracting and retaining
the best people in the industry; and driving new opportunities through
exploration and acquisition.
Kinross maintains listings on the New York Stock Exchange (symbol:KGC)
and on the Toronto Stock Exchange (symbol:K).
(1) Forecast production is based on the following gold prices
assumptions: 2007 - $475; 2008 - $475; 2009 - $425.
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This press release includes certain "Forward-Looking Statements" within
the meaning of section 21E of the United States Securities Exchange Act of
1934, as amended. All statements, other than statements of historical fact,
included herein, including without limitation, production forecasts,
statements regarding potential mineralization and reserves, exploration
results and future plans and objectives of Kinross and Crown, are forward-
looking statements that involve various risks and uncertainties. Forward
looking statements are based on the opinions and estimates of management as of
the day they are made. There can be no assurance that such statements will
prove to be accurate and actual results and future events could differ
materially from those anticipated in such statements. Development of Buckhorn
Mountain is subject to the successful completion of the acquisition of Crown
by Kinross, the completion and implementation of an economically viable mining
plan, obtaining the necessary permits and approvals from various regulatory
authorities, and compliance with operating parameters established by such
authorities. There are important factors that could cause actual results to
differ materially from Kinross' and Crown's expectations, such as:
uncertainties related to expected production rates, timing of production and
costs of production and milling; uncertainties relating to mineral reserve
estimates, uncertainties related to unexpected judicial or regulatory
proceedings, changes in laws and regulations relating to mining, environmental
protection and health and safety of mine workers; changes in the price of gold
and supplies such as fuel, diesel, tires, energy, mining equipment and spare
parts; fluctuation in exchange rates in the Canadian dollars, Chilean Peso,
Brazilian Real versus the US dollar; unexpected environmental issues;
geopolitical uncertainties and labour strikes, work stoppages or other
employment related issues. Additional factors are disclosed under the heading
"Risk Factors" in its Annual Information Form and elsewhere in Kinross' and
Crown's documents filed from time to time with the Ontario Securities
Commission, the United States Securities and Exchange Commission and other
regulatory authorities.
Where to Find Additional Information about the Acquisition:
This press release is not, and is not intended to be, a solicitation of
proxies or an offer of securities. Kinross has filed a registration statement
on Form F-4 with the Securities and Exchange Commission ("SEC") in connection
with the proposed acquisition. Investors and security holders of Kinross and
Crown are urged to read the proxy statement/prospectus and other relevant
materials included in the registration statement, as well as subsequent
amendments to the registration statement when they become available, as they
contain important information about Kinross, Crown and the proposed
acquisition. The registration statement, including the proxy
statement/prospectus and other relevant materials, and any other documents
filed by Kinross or Crown with the SEC, may be obtained free of charge at the
SEC's website at www.sec.gov. A free copy of the joint proxy
statement/prospectus and other relevant materials may also be obtained from
Kinross, when finalized and available.
Crown and its officers and directors may be deemed to be participants in
the solicitation of proxies from its stockholders with respect to the
transactions contemplated by the proposed acquisition. A description of the
interests of the directors and executive officers of Crown will be contained
in the definitive proxy statement/prospectus and the other relevant documents
filed with the SEC.
%SEDAR: 00002968E
