Kinross Gold - CEO, J. Paul Rollinson.
CEO, J. Paul Rollinson.
Source: Kinross Gold.
  • Kinross Gold (TSX:K) has signed a revised agreement with the Government of Mauritania, regarding the company’s Tasiast Sud mine
  • Under the partnership, the Government will provide Kinross with a 30-year exploitation license for Tasiast Sud, along with accelerated permitting processes
  • In return, Kinross will make payments of approximately C$13.61 million and $20.41 million following the completion of certain definitive agreements
  • A three per cent royalty on the Tasiast Sud mine will also be increased to up to 6.5 per cent, depending on the price of gold per ounce
  • Kinross Gold (K) is currently down 0.83 per cent and is trading at $8.36 per share 

Kinross Gold (TSX:K) has signed a revised agreement with the Government of Mauritania, regarding the company’s Tasiast Sud mine.

Located roughly 300 kilometres of the capital Nouakchott, the wholly owned open-pit mine produced 391,097 ounces of gold equivalents in 2019 at a cost of C$819.27 per ounce.

Under the terms of the enhanced partnership, the Government of Mauritania will provide Kinross with a 30-year exploitation license, along with accelerated permitting processes and the possibility of early mining. 

In addition, a tax exemption on fuel duties has been reinstated, and the government has agreed to repay roughly $54 million in outstanding VAT refunds by 2025.

In return, Kinross will pay $13.61 million upon the completion of definitive agreements to resolve disputed fuel use and tax exemption matters.

A further $20.41 million will be paid to the government upon receiving the exploitation license. This is expected to resolve a separate dispute over Kinross’ earlier application to convert the Tasiast Sud exploration license to an exploitation license.

Pursuant to the 2006 Tasiast Mining Convention, Kinross has committed to a three per cent royalty on the Tasiast Sud mine, payable to the Government. In order to reflect a changing market and align Mauritania with surrounding African nations, this royalty will be increased in line with fluctuations in current gold prices.

Should gold prices per ounce fall below $1,360 per ounce, the royalty will be increased to four per cent. However, should the price per ounce increase to more than $2,500, the royalty will be bumped to 6.5 per cent.

The Government of Mauritania will also have the right to two seats on the Board of Directors of the Kinross subsidiary that operates the Tasiast Sud mine. This is expected to enhance transparency between the company and the Government.

J. Paul Rollinson, President and CEO of Kinross Gold, said he is pleased to see the further development of a positive foreign investment climate in Mauritania.

“This balanced agreement will deliver increased stability, position Tasiast for long-term success, and provide enhanced benefits to Mauritania and its people,” he said.

Kinross Gold (K) is down 0.83 per cent and is trading at $8.36 per share at 11:06am EDT.

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