LONDON: Highland Gold Mining Limited has entered into an agreement for the sale of the Kayenmivaam (Kayen) licence for cash consideration of US$15 million plus a royalty.

Kayen is an early-stage gold exploration property covering 1,214 square kilometres in the Chukotka region of Russia. Highland Gold received the licence as an add-on to the Valunisty acquisition in December 2018. The site’s distance from the Valunisty mine and from the Company’s premier development project, Kekura, preclude any operational synergies, and the project was considered to be a non-core asset.

Highland Gold has agreed to sell its wholly-owned subsidiary SVGGK LLC, holder of the Kayen license, to an unrelated party for US$15 million to be paid in two equal instalments, the first at closing and the second following the legal transfer of shares. In addition, the Company will receive a 2% royalty on gold produced and sold from the deposit in excess of 500,000 ounces for a period of 30 years. The transaction is subject to approval by Russia’s Federal Anti-Monopoly Service and is expected to be completed later this year.

The structure of the deal ensures that Highland Gold receives an immediate cash payment in a capital-intensive year during which the Company is investing in the construction of Kekura and the completion of improvement projects at the Belaya Gora and Novoshirokinskoye mines. At the same time, the Company retains an interest in Kayen’s upside potential via the royalty on future production from the licence.