Kirkland Lake Gold is seeking to expand its regional presence with an offer to acquire its northeastern Ontario neighbour, St. Andrew Goldfields, in a proposed all-share $178-million deal.
The mid-tier gold miner announced Nov. 16 that it has entered into a binding definitive agreement to acquire all of St. Andrew’s outstanding common shares.
The proposed deal would see existing Kirkland Lake and St Andrew shareholders owning approximately 71 per cent and 29 per cent of the combined company, respectively.
The merged company would boast a stable of four mines and two mills in the prolific Abitibi greenstone belt between Timmins and Kirkland Lake, with potential production next year of between 260,000 and 310,000 ounces.
Both companies have a large expanse of exploration properties with significant upside.
Kirkland Lake Gold’s camp includes the Macassa complex, which produces more than 150,000 ounces annually, and plans over the next three years to surpass 180,000 ounces as exploration projects are entered into the production stream.
St. Andrew has gold mining operations in the Timmins mining district with its Holt-Holloway Mines, and the recent addition of the Taylor Mine. The company expects to produce 105,000 ounces this year with expectations to bump up to 140,000 ounces in 2016.
Shareholders get to vote on the deal sometime in January. A 66 per cent majority vote will be needed to approve the transaction.
"This transaction adds high quality assets and ounces to our existing operations and is immediately accretive to our production, net asset value and cash flow on a per share basis,” said Kirkland Lake Gold president-CEO George Ogilvie in a press release. “With this acquisition we continue to focus on gold production in proven and safe mining jurisdictions. We believe this creates both financial and operational synergies which will contribute greatly to our continued success."
"We are pleased to be combining with another established producer to create a leading intermediate gold producer focused in Canada,” added St. Andrew president-CEO Duncan Middlemiss. “St Andrew shareholders will have the opportunity to benefit from the promising potential of the combined company, with greater trading liquidity and capital markets exposure to drive shareholder value. Both St Andrew Goldfields and Kirkland Lake Gold are pleased to bring forth a consolidated Abitibi focused company, as we all believe in the huge potential of our assets."
