TORONTO – Kirkland Lake Gold and St Andrew Goldfields have entered into an agreement allowing KLGold to purchase all the shares of St Andrew, creating an intermediate gold producer with its primary assets in Ontario.
The combined company will have two mills and four gold mines in the Abitibi greenstone belt in Ontario. Together they will have an estimated 2016 output of 250,000 to 310,000 oz. Cash costs are expected to be between US$600 and US$700 per ounce. Total reserves will be an estimated 2.3 million oz, sufficient to support long term production.
Shareholders of St Andrew will receive 0.0906 of one common share of KLGold for each St Andrew common share held. That is the equivalent of C$0.47 per St Andrew common share, based on the closing price of Kirkland Lake on Nov. 16, 2015, or a 46% premium based on both companies’ 20-day volume weighted average prices and a 25% premium to St Andrew’s closing price, both as at Nov. 16, 2015, on the TSX. The terms of the arrangement imply a total equity value of approximately C$178 million on a fully diluted in-the-money basis.
Upon completion of the proposed transaction, existing Kirkland Lake and St Andrew shareholders will own approximately 71% and 29% of the combined company, respectively.
Additional details of the transaction are found at KLGold.com or SASGoldMines.com.