Kinross Gold announced on Sept. 30 that it will acquire a 70 per cent interest in Royal Gold’s Peak Gold joint venture project in Alaska for US$93.7 million.

Forty per cent of that stake in the project will come from purchasing Royal Alaska, a subsidiary of Royal Gold, for US$49.2 million. The company will also purchase a further 30 per cent stake in the project from CORE Alaska for US$44.5 million. Contango Ore, which owns CORE Alaska, will retain a 30 per cent non-operating interest in the project.

The company has described the project as a low-risk “tuck-in” and plans to use it to supplement its existing Alaska operations. “The relatively high-grade, low-cost Peak Gold project is an excellent addition to our portfolio, as it allows us to leverage our existing mill and infrastructure at Fort Knox and strengthens our medium-term production and cash flow profile,” Kinross president and CEO J. Paul Rollinson said. “In today’s gold price environment, Peak Gold is an attractive, high-margin project that is expected to generate robust returns.”

Related: Ivanhoe Mines releases integrated development plan outlining phased development of its joint mine complex in the Democratic Republic of Congo

Kinross plans to transport ore from the project to its Fort Knox mine, where it will blend the project’s higher grade ore with the ore at Fort Knox. The company estimates that this will reduce Fort Knox’s average all-in sustaining costs by US$70 per ounce of gold and extend the mill’s operating life.

According to a 2018 preliminary economic assessment, the project has a measured and indicated resource of 1.2 million ounces from 9.2 million tonnes grading 4.1 grams per tonne. It also contains an estimated inferred resource of 116,000 ounces of gold from 1.3 million tonnes grading 2.7 grams per tonne.

The company has conducted its own preliminary estimates for the project. Assuming a gold price of US$1,200 per ounce, Kinross says the project will produce one million ounces of gold over 4.5 years at an average grade of six grams per tonne and an all-in sustaining cost of about US$750 per ounce of gold. The company plans to spend US$110 million in initial capital expenditures.

Kinross plans to begin a drilling program in order to further develop the project’s resource base, and expects to complete permitting as well as a feasibility study by the end of 2022. Production at the project is planned to begin in 2024.