Aim-listed Highland Gold on Thursday announced the $91-million acquisition of a producing mine and two licences in Russia’s Chukotka region, where the company already owns the Kekura and Klen development projects.
The assets, which were previously under the management of Highland CEO Denis Alexandrov, should boost Highland’s production by about 11% to 300 000 oz/y.
The acquisition includes the 31 000 oz/y openpit Valunisty mine, about 250 km from the port of Egvekinot. With reserves of 520 000 oz and resources of 1.15-million ounces, the mine will operate for another 11 years.
Highland is also buying assets in the KAS licence area, including the Gorny mine, near the Valunisty mill, the Zhilny deposit and Shakh exploration area.
In addition, it will acquire the Kayen exploration area, about 130 km from Russia’s second-largest gold mine, Kupol. The 1 214 km2 exploration area comprises five exploration targets, where $15-million has been spent historically.
The addition of these assets will lift Highland’s ore reserve and mineral resource by about 3.4-million tonnes at 5.1 g/t of gold and gold equivalents, and 17.6-million tonnes at 3 g/t gold and gold equivalent, respectively.
“This acquisition adds a fourth operating mine, Valunisty, to our portfolio as well as positive upside potential in the surrounding KAS licence area, all in a familiar region with existing mining infrastructure. The transaction is structured in such a way as to be immediately value-accretive to the benefit of all our shareholders,” commented Alexandrov.
The company is buying the assets from Cyprus-registered Aristus Holdings, in which certain Highland shareholders, including executive chairperson Eugene Shvidler and nonexecutive director Valery Oyf, indirectly hold shares.
Highland said that independent directors have consulted with an adviser and have deemed the acquisition fair and reasonable.
The company would pay for the acquisition by issuing 38 621 343 consideration shares to the value of $78.7-million and the balance by the assumption of about $12.3-million of net debt.