A big deal has been announced in the gold mining industry.
Canada’s Kirkland Lake Gold Ltd. (TSX:KL) as agreed to buy Detour Gold Corp. (TSX:DGC) for $4.9 billion, furthering a mergers and acquisition trend in the gold mining sector.
With an all-share deal, Kirkland will take advantage of a record stock price to acquire the company, which operates the Detour Lake mine in northeastern Ontario. The agreement values Detour at $27.50 a share, a 24% premium to the closing price last Friday.
Other big deals to take place in the gold mining sector over the last year include Newmont Mining Corp.’s acquisition of Goldcorp Inc. (TSX:NEM) and Barrick Gold Corp.’s (TSX:ABX) takeover of Randgold Resources Ltd.
Detour shareholders will receive 0.43 share of Kirkland, according to the statement. After the deal is completed, existing Kirkland shareholders will own 73% of the new company. Kirkland’s stock price has surged in the past three years, climbing more than 800% on soaring profits.
The Detour Lake gold mine is expected to produce for more than 20 years and can generate 600,000 ounces a year. It’s about the same size as Kirkland’s biggest project, the Fosterville mine in Australia. Detour shares have almost doubled this year, helped by a rally in gold prices.
