Also buys 19.9% equity stake in Harry Winston
Toronto, Ontario, March 19, 2009 -- Kinross
Gold Corporation (TSX-K; NYSE-KGC) ("Kinross") announced today that
it has signed a subscription agreement with Harry Winston Diamond
Corporation (TSX-HW; NYSE-HWD) ("Harry Winston") further to which
Kinross will make a net investment of US$150 million in exchange
for an indirect interest in the Diavik Diamond Mine in Canada's
Northwest Territories and a 19.9% shareholding in Harry
Winston.
The agreement consists of two components. The first component is
a subscription for a minority 22.5% interest in the partnership
that holds Harry Winston's 40% interest in the Diavik diamond mine
joint venture operated by Rio Tinto. The net effective subscription
price is US$104.4 million. The second component is an equity
private placement (subject to regulatory approval) of 15.2 million
common shares of Harry Winston at a price of US$3.00 per share, for
a total investment of US$45.6 million, giving Kinross a 19.9%
interest in Harry Winston.
Following the closing of the transaction, Kinross will be offered a
seat on the Harry Winston board of directors. Harry Winston will
continue to market all of the partnership's share of diamond
production from the Diavik mine, including the portion attributable
to Kinross' interest. In addition, the parties have agreed to
consider future investment opportunities in the diamond mining
industry on a case-by-case basis.
"We are acting on a rare opportunity to acquire a stake in one
of the world's great diamond mines, operating in northern Canada,
with a long mine life and a record of strong cash flows," said
Kinross President and CEO Tye Burt. "For Kinross, this represents a
strategic investment that is accretive and has the potential to
create excellent long-term value for our investors."
"We view diamond mining as complementary to our core business of
gold mining, which remains our primary focus. We believe that, as
with gold, the long-term supply and demand fundamentals for
high-quality diamonds are strong," Mr. Burt said. "Harry Winston
occupies a unique and respected place in the global diamond
business and we look forward to working with them in the
future."
Subject to customary closing conditions, the agreement is
expected to close within approximately two weeks.
Cautionary Statement on Forward-Looking Information
All statements, other than statements of historical fact, contained or incorporated by reference in this news release, including any information as to the future performance of Kinross, constitute “forward looking statements” within the meaning of applicable securities laws, including the provisions of the Securities Act (Ontario) and the provisions for “safe harbour” under the United States Private Securities Litigation Reform Act of 1995 and are based on expectations, estimates and projections as of the date of this news release. The words “plans,” “expects,” or “does not expect,” “is expected,” “budget,” “scheduled,” “estimates,” “forecasts,” “intends,” “anticipates,” or “does not anticipate,” or “believes,” or variations of such words and phrases or statements that certain actions, events or results “may,” “could,” “would,” “might,” or “will be taken,” “occur” or “be achieved” and similar expressions identify forward looking statements.
Forward-looking statements are necessarily based upon a number of estimates and assumptions that, while considered reasonable by Kinross as of the date of such statements, are inherently subject to significant business, economic and competitive uncertainties and contingencies. The estimates and assumptions of Kinross contained in this news release, which may prove to be incorrect, include, but are not limited to, the various assumptions set forth herein as well as: (1) that Kinross will complete the acquisition of a 19.9% equity interest in Harry Winston and the acquisition of a 22.5% interest in a partnership that holds Harry Winston’s interest in the Diavik diamond mine joint venture operated by Rio Tinto; (2) certain assumptions relating to the market price for diamonds and the expected levels of supply and demand for diamonds; (3) there being no significant disruptions affecting operations at the Diavik diamond mine, whether due to labour disruptions, supply disruptions, power disruptions, damage to equipment or otherwise; (4) production at the Diavik diamond mine being consistent with Kinross’ current expectations; (5) the continued operation of the Diavik diamond mine; (6) mineral reserve and resource levels for the Diavik diamond mine being materially consistent with the public disclosure to date; (7) the satisfaction of the closing conditions provided for in the subscription agreement; and (8) there being no material changes to the arrangements entered into with Harry Winston for the marketing and selling of diamonds.
The forward-looking information set forth in this news release is subject to various risks and other factors which could cause actual results to differ materially from those expressed or implied in the forward-looking information, including the risk that the acquisition of the 19.9% equity interest in Harry Winston and the 22.5% interest in the partnership that holds Harry Winston’s interest in the Diavik diamond mine joint venture operated by Rio Tinto will not be completed for any reason. Certain of these risks, factors, estimates and assumptions are described in more detail in Kinross’ most recently filed Annual Information Form in the section entitled “Risk Factors” and the “Risk Analysis” section of our most recently filed Management’s Discussion and Analysis, to which readers are referred and which are incorporated by reference in this news release. In addition, all forward-looking statements made in this news release are qualified by the full “Cautionary Statement” in such Annual Information Form and the “Cautionary Statement on Forward Looking Information” in such Management’s Discussion and Analysis. These risks, factors, estimates and assumptions are not exhaustive. Kinross disclaims any intention or obligation to update or revise any forward-looking statements whether as a result of new information, future events or otherwise, or to explain any material difference between subsequent actual events and such forward-looking statements, except to the extent required by applicable law.