Kinross Gold Corporation (TSX: K, NYSE: KGC) can get a majority stake in Aurion Resources Ltd.’s (TSXV: AU) (OTCQX: AIRRF) Launi East Property if Kinross invests a significant amount in its exploration over the next few years.
The property is owned by Aurion and is 10 kilometres northwest of the municipality of Sodankylä, Finland. However, in the agreement, Kinross will have the right to earn up to an undivided 70 per cent interest in the property, based on certain conditions and investments.
To achieve this, Kinross is obligated to make substantial financial commitments towards the exploration of the property. Specifically, expenses must reach a minimum of USD$10 million on exploration activities by the seventh anniversary of the agreement, which is dated Aug. 21st, 2023.
This means that by 2030, Kinross should have spent this amount to fulfill its end of the bargain.
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Additionally, the agreement stipulates certain immediate financial obligations on Kinross’s part. As a firm commitment to their interest in the Launi East Property, Kinross has agreed to spend at least USD$2 million on exploration within the first two years from the date of the agreement, contingent upon them obtaining all the necessary permits for a drilling program.
There are provisions in place to protect Aurion’s interests. Should Aurion’s stake in the joint venture be diluted to 10 per cent or less due to the terms of the agreement, its interest will automatically convert into a 2 per cent Net Smelter Return (NSR) Royalty on the property.
Kinross, however, retains an option to purchase half of this royalty, effectively reducing it to 1 per cent, by paying Aurion an amount of USD$2 million.
“We are pleased to extend our excellent working relationship with Kinross and their first-class exploration team on the Launi East property,” Aurion’s CEO Matti Talikka said in a statement.
“The company staked the Launi East Property in 2018 and has since completed a significant amount of surface, geophysical, geochemical work on the property, as well as limited drilling.”
Aurion’s stock went up by 2 per cent on Wednesday on the Canadian Ventures Exchange. Similarly, Kinross’ stock went up 3.25 per cent to $6.67 on the Toronto Stock Exchange.
