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Canada's Kirkland buys Ontario gold mine as part of C$4.9 billion deal

  • Author
  • Nick Lazzaro
  • Editor
  • Kshitiz Goliya
  • Commodity
  • Metals

Pittsburgh — Kirkland Lake Gold has obtained the rights to the Detour Lake gold mine in northeastern Ontario as part of a definitive agreement to acquire Detour Gold, the previous owner of the mine, both companies said in a joint statement Monday.

Under the agreement, Kirkland will procure all of Detour's issued and outstanding securities. The implied equity of the acquisition is valued at about C$4.9 billion ($3.7 billion).

"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 CEO Tony Makuch said.

"Once the transaction is completed, we will continue efforts to optimize current operations and commence engineering work to evaluate expansion opportunities at Detour Lake, which we anticipate could lead to significant production growth, improved unit costs and higher levels of mineral reserves and mineral resources," Makuch added.

The large-scale, open-pit Detour Lake mine currently produces about 600,000 oz of gold per year with potential for expansion, according to the statement.

The mine produced 137,670 oz of gold in the third quarter, Detour said in its quarterly financial statement.

With the addition of Detour Lake to its operating portfolio, Kirkland adds 15.4 million oz to its proven and probable mineral reserve base, which includes existing reserves at its Macassa mine in Canada and Fosterville mine in Australia. Kirkland plans to increase gold production and expand the mineral reserves and resources at Detour Lake by optimizing and expanding the mine.

"Turning to exploration, we are planning extensive drilling at highly prospective exploration targets within the 1,040 km2 Detour Gold land position, where we believe there is considerable potential for new discoveries to support future mineral resource growth," Makuch said. "The work we are planning around Detour Lake will be a key component of our corporate exploration program going forward."

Both companies expect to close the transaction by the end of January 2020.

-- Nick Lazzaro, nick.lazzaro@spglobal.com

-- Edited by Kshitiz Goliya, newsdesk@spglobal.com