Investors back Kirkland’s acquisition of rival Detour

Deal adds asset with potential for growth above current production

Investors have endorsed the allstock sale of Detour Gold Corp. to Canadian rival Kirkland Lake Gold Ltd. in a deal worth $4.34 billion based on the buyer’s closing stock price on Monday.

In separate votes held Tuesday, Detour shareholders voted 86 per cent in favour of the proposal, while nearly 99 per cent of the shares voted by of Kirkland Lake shareholders also backed the deal.

Kirkland Lake announced the proposed purchase of the owner of the Detour Lake open pit gold mine in northeastern Ontario in November.

At the time, Kirkland Lake CEO Tony Makuch said it added a “third cornerstone asset” to its portfolio anchored by two gold mines, the Macassa mine in northern Ontario and Fosterville mine in Australia.

Some analysts were initially unenthusiastic about the deal to buy Detour because of fears its lower quality mine resource would degrade Kirkland Lake’s premium valuation.

But advisory firms ISS and Glass Lewis later recommended the deal to both sets of shareholders.

Under the agreement, Detour Gold shareholders will receive 0.4343 of a Kirkland Lake share for each Detour Gold share they hold.

Kirkland Lake said the acquisition will add an asset with potential for growth above its current production of about 600,000 ounces per year, gives the company combined net cash of $630 million (U.S.) and grows mineral reserves by 15.41 million ounces and reserve life by eight years.

It said it expects to realize cost-saving synergies of $75 million to $100 million per year.