TORONTO (miningweekly.com) – Toronto-based Kinross Gold has agreed to sell half of its 50% stake in the Cerro Casale project, in Chile, to larger rival Barrick Gold, the firm announced late on Wednesday.

Kinross also revealed that the capital cost of the large gold/copper project has increased once again, this time to more than $4-billion.

Barrick, which owns the remainder of the asset, will buy the 25% interest for $475-million – $455-million in cash plus the assumption of a $20-million contingent obligation.

The sale “scales the project to a more optimal size within our portfolio, and generates immediate cash proceeds,” commented Kinross CEO Tye Burt.

The transaction will also cut Kinross' share of the large capital cost of the project by more than $1-billion.

The company revealed in its fourth-quarter results that a newly completed feasibility study estimates initial capital expenditures at $4,2-billion, of which Kinross will now only need to contribute $1,05-billion.

The previous price-tag for the project was $3,65-billion, which Barrick and Kinross announced in March 2009. The figure was already an increase from an earlier forecast of $2-billion.

The Cerro Casale project contains more than 23-million ounces of gold and six-billion pounds of copper.

Meanwhile, Kinross reported fourth-quarter net earnings of $235,6-million, compared with a net loss of $968,8-million a year earlier.

Excluding some items, adjusted net earnings were $148,6-million, compared with adjusted earnings of $56,8-million in the same period of 2008.

Kinross produced 613 858 gold-equivalent ounces in the fourth quarter of 2009, a 12% increase over a year earlier, and 2,24-million gold equivalent ounces for the full year, a 22% increase over 2008.

Kinross owns mines in the US, Russia, Brazil and Chile, and announced earlier this month it had agreed to buy a high-grade gold deposit located about 90 km from its new Kupol mine, in eastern Russia, for $368-million in cash and shares.

Barrick is due to report fourth-quarter and annual results on Thursday morning.

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