Toronto, Ontario - Kinross Gold Corporation (TSE - K, NYSE - KGC) is pleased to announce that it has agreed to acquire an effective 2% net smelter return (NSR) royalty from Inco Limited (TSE - N, NYSE -N), covering many of the key claims at Kinross' Hoyle Pond property in Timmins, Ontario, Canada. As consideration for the purchase of the royalty, Inco Limited will be issued 1,000,000 Kinross common shares plus 200,000 Kinross common share purchase warrants, exercisable for one year at Cdn $12 per share. Under securities regulations, shares issued are subject to a one year hold period. The
ascribed value of this transaction for Kinross accounting purposes is Cdn $9.95 million.

The royalty, known as the "Canico Royalty", was created as a result of the 1978 Joint Venture Agreement between Canadian Nickel Company Limited (Canico), a wholly-owned subsidiary of Inco Limited, and a predecessor company to Kinross Gold Corporation. The royalty is effectively a 2% NSR royalty on all production exceeding a threshold amount of 350,000 ounces of gold from the specified
claims. This threshold amount was about to be exceeded such that the first royalty payments would have been due in the fourth quarter of 1996. Approximately 80% of the current reserves of about two million ounces of gold at Hoyle Pond would have been subject to the "Canico Royalty". The relevant zones containing reserves covered by the " Canico Royalty" include all of the 1060 Zone, most of the 7 Zone and a small portion of the Hoyle Pond Main Zone. In addition, the "Canico Royalty" ground includes highly prospective areas such as the 950 Zone, 350 Zone, Owl Creek East, Owl Creek, and 100 Zone. These zones collectively contain most of Hoyle Pond's drill indicated resources of 622,000 ounces of gold reported at year-end 1995. Current exploration activity at Hoyle Pond is focused on the down dip extension of the 1060 Zone, Owl Creek East and the so-called Z fold area, all of which are on "Canico Royalty" ground.

Kinross anticipates that this transaction will be non-dilutive to Kinross' earnings and has the potential
to be increasingly positive to earnings as exploration continues on this very prospective property. The acquisition of the "Canico Royalty" is subject to appropriate regulatory approval and is expected to close in early November, 1996.

 

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