TORONTO – Kinross Gold Corp. (TSX:K)(NYSE:KGC) is selling its mothballed Fruta del Norte gold project in Ecuador for US$240 million in cash and equity to Fortress Minerals Corp. (TSXV:FST.H).
Kinross will receive between US$100 million and US$190 million in cash, depending on the net proceeds an equity financing by Fortress, a member of the Lundin Group. The balance of the purchase price will be paid in Fortress equity.
Affiliates of the Lundin Family Trust have committed up to US$100 million to the private placement aimed at raising up to C$250 million, Kinross said.
“We believe that Fortress Minerals, as part of the Lundin Group of Companies, is very well positioned to take FDN to the next stage in its development,” Kinross CEO J. Paul Rollinson said in a statement Tuesday.
Once the transaction closes, expected by mid-December, Fortress will change its name to Lundin Gold Inc.
The transaction is subject to certain conditions, including Fortress shareholder and stock exchange approval as well as the granting by the Ecuadorian government of an 18-month extension period from transaction closing to provide time for Fortress to carry out additional project feasibility work and development negotiations.
Kinross announced back in June 2013 that it was halting development of the Fruta del Norte project, saying it was unable to reach an agreement with the Ecuadorian government on “key economic and legal terms.”
Kinross said investing further in Fruta del Norte was not in the best interests of the company and its shareholders and the miner took a $720-million charge for abandoning the project.
Kinross is a Canadian-based gold mining company with mines and projects in Brazil, Chile, Ghana, Mauritania, Russia and the United States.