On the back of a US$283 million agreement to acquire the Chulbatkan gold project in Russia, Kinross Gold Corp. management was optimistic on an Aug. 1 earnings call about the project's chances of getting approved as a strategic resource if necessary.

Geoffrey Gold, a Kinross executive vice president, noted that projects in Russia with less than 50 tonnes of gold resources, or about 1.6 million ounces, do not need approval under the strategic project law.

"Under a literal interpretation of the law, strategic approval for the project is not required because the current registered resource with the authorities of 1 million ounces does not exceed the strategic 50 tonne threshold," he said. "However ... we do have our own estimate of 3.9 million ounces that does exceed the threshold."

Gold said Kinross had reached out to Russian authorities to seek guidance on whether it needed to apply for strategic approval. "If it is, we would make the filing and would expect to receive that approval in six to eight months," he said, noting that Kinross has in the past successfully filed two applications under the law.

Chulbatkan expands the company's footprint in Russia, where it also owns the Kupol and Dvoinoye gold mines. Kinross estimates that about 20% of its gold equivalent production in 2019 will come from Russia.

In its initial assessment of Chulbatkan as a possible mine, Kinross said it could produce about 1.8 million ounces of gold over a six-year mine life and that it would cost about US$500 million to build.

On the earnings call, Kinross President and CEO Paul Rollinson was vague about the project's rate of return. "We don't get into that," he said. "We've got a whole range of sensitivities, and I would say we're comfortably double digits."

Rollinson said the acquisition was an "excellent fit" for Kinross, in part given its history of operating in Russia and the potential to grow the project's resource. "There is significant upside potential beyond the [3.9] million-ounce resource estimate, as the deposit is highly continuous and is open along strike and at depth," he said.