Kinross Gold Corporation (USA)(NYSE:KGC) closed the sale of its 25% stake in the Cerro Casale project in Chile. Also, it sold its 100% stake in the Quebrada Seca exploration assignment based nearby to Cerro Casale, to Goldcorp Inc., previously reported on March 28, 2017.
The consideration for the offer comprises cash of US$260 million which was compensated at closing and which comprised US$20 million for Quebrada Seca; a contingent cash compensation of US$40 million, payable following a promising construction determination for Cerro Casale; Goldcorp expecting a US$20 million contingent compensation obligation following Barrick Gold Corporation under the current Cerro Casale shareholders deal, which is due when commercial manufacturing at Cerro Casale begins; and a 1.25% royalty from Goldcorp depending on 25% of gross revenues from metals sold at Quebrada Seca and Cerro Casale, with Kinross foregoing the initial US$10 million.
Additionally, Kinross finalized the previously reported water supply deal with the Cerro Casale JV. Kinross anticipates to use the proceeds from this sale for its organic development assignments and to further bolster its balance sheet.
Gold is often stated as a safe-haven resource in the case of political and economic turmoil. The yellow metal price has jumped over 10% year-to-date. Political uncertainty across the globe is one of the prime factors that has led the gold demand this year. Spot gold recorded high of over $1,294 per ounce last Tuesday, which is the highest mark in seven weeks.
Many a times gold is used to hedge portfolios from volatile global market events. Investors will be closely looking at the Fed’s 2-day meeting which is planned to take place on June 14, 2017. The Federal Reserve surged the borrowing cost by as much as 25 basis points in last meeting and is projected to do another rate hike in this week.