Kirkland Lake Gold has agreed to acquire fellow Canadian gold miner Detour Gold in an all-stock deal worth around C$4.9bn ($3.68bn).
The acquisition will give 100% ownership to Kirkland in the producing Detour Lake mine, a long-life, large-scale open pit operation located in northeastern Ontario. The current production of the Canadian gold mine, which began operations in February 2013, is around 600koz per year.
Detour Gold acquired the Detour Lake mine in January 2007.
According to Kirkland Lake Gold, the gold mine has substantial growth potential with an attractive exploration upside to be exploited for future mineral resource growth. The company has plans to drill highly prospective exploration targets inside the 1,040km2 Detour Gold land position, which is said to have significant potential for new discoveries.
The acquisition of Detour Gold adds 15.41Moz to the mineral reserve base of Kirkland Lake Gold, while extending the reserve life index of the company’s portfolio by eight years.
Kirkland Lake Gold president and CEO Tony Makuch said: “The addition of Detour Lake provides an opportunity to add a third cornerstone asset that is located in our back yard in Northern Ontario. Detour Lake will provide the pro forma company with a 20-plus year mine life which provides unparalleled optionality and excellent growth potential for the benefit of all shareholders.”
Kirkland Lake Gold has operations in Canada and Australia. The company’s primary assets are the Macassa Mine in Northern Ontario and the Fosterville Mine in Victoria, Australia.
The deal values each share of Detour Gold at C$27.50 ($20.67)
As per the terms of the transaction, Kirkland Lake Gold will acquire all the shares of Detour Gold at a ratio of 0.4343:1, valuing each share of the latter at C$27.50 ($20.67).
Post-acquisition, Kirkland Lake Gold and Detour Gold shareholders will own nearly 73% and 27% of the combined company, respectively.
Detour Gold president and CEO Mick McMullen said: “This Transaction recognizes the improvements we have made to re-engineer Detour Gold’s operations and business practices, while providing our shareholders with an immediate premium and a unique opportunity to gain exposure to a diversified portfolio of low-cost, high-grade mines in prolific and low-risk mining jurisdictions.”
The transaction will be subject to approvals from regulators, shareholders and courts apart from satisfying certain other closing conditions, after which it is expected to be closed by the end of January 2020.
