The Financial Post reports in its Tuesday, Nov. 26, edition that Kirkland Lake Gold on Monday announced a multibillion-dollar acquisition of Detour Gold.
The Post's Gabriel Friedman writes that the combination marries two near opposites: Kirkland Lake operates two high grade underground mines at some of the lowest cash costs in the sector, whereas Detour operates a single, low-grade bulk tonnage open pit mine at comparatively higher costs.
The acquisition would boost Kirkland's annual gold production by about 33 per cent to more than 1.5 million ounces per year, but its costs are also expected to rise.
The value of the all-stock deal was somewhat uncertain as of Monday, initially pegged at $4.9-billion but falling with Kirkland's stock. If some investors expressed initial skepticism, billionaire Eric Sprott, who stepped down as chairman earlier this year, said he would support the deal.
Mr. Sprott says, "The more I reflect on Detour, I think we're 'stealing value' -- value that the market's not seeing." Detour reported all-in sustaining costs of $1,198 in the third quarter whereas Kirkland reported all-in sustaining costs of $562, about half of that.
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