Kirkland Lake Gold Ltd. (“
Kirkland Lake
Gold”, the “
Company”) (TSX:KL) (NYSE:KL)
(ASX:KLA) announced today that it has filed its management
information circular and related meeting materials in connection
with a special meeting (the “
Meeting”) of
shareholders to be held on January 28, 2020. The purpose of the
Meeting is to seek approval in connection with Kirkland Lake Gold’s
previously announced proposed acquisition of all of the issued and
outstanding common shares of Detour Gold Corporation
(“
Detour Gold”) by way of a plan of arrangement
(the “
Arrangement”) under Section 192 of the
Canada Business Corporations Act.
Shareholders of Kirkland Lake Gold should
receive these meeting materials by mail shortly. The meeting
materials, together with an investor presentation and other
information, are also available on Kirkland Lake Gold’s website at
www.klgold.com and on SEDAR at www.sedar.com and EDGAR at
www.sec.gov.
Kirkland Lake Gold encourages shareholders to
read the meeting materials in detail. To ensure that your Kirkland
Lake Gold shares will be represented at the Meeting, shareholders
should carefully follow the voting instructions provided in the
meeting materials. The deadline for the receipt of proxies is 11:00
a.m. (Eastern time) on January 24, 2020.
THE ARRANGEMENT AGREEMENT
Kirkland Lake Gold and Detour Gold entered into
an arrangement agreement pursuant to which Kirkland Lake Gold will
acquire all of the issued and outstanding common shares of Detour
Gold on the basis of 0.4343 of a Kirkland Lake Gold common share
for each Detour Gold common share held. Upon completion of the
Arrangement, existing Kirkland Lake Gold and Detour Gold
shareholders will own approximately 73% and 27% of the outstanding
shares of the pro forma company, respectively.
BOARD RECOMMENDATION
After consultation with the Kirkland
Lake Gold management team and its financial and legal advisors, and
following careful consideration, the Board of Directors of the
Company unanimously recommends that Kirkland Lake Gold shareholders
vote FOR the proposed resolution.
REASONS FOR AND BENEFITS OF THE ARRANGEMENT
In evaluating the Arrangement and unanimously
determining it to be in the best interests of Kirkland Lake Gold,
as well as recommending that Kirkland Lake Gold shareholders
support the Arrangement, the Board of Directors of Kirkland Lake
Gold reviewed a significant amount of technical, financial and
operational information relating to Detour Gold and the anticipated
benefits and advantages resulting from the Arrangement, including,
among others:
- Adds a long-life, high
quality asset in a low-risk jurisdiction. The Detour Lake
mine is a uniquely large-scale, long-life Canadian mine, with
current production of approximately 600,000 ounces of gold per year
and substantial growth potential.
- Solidifies our position as
a senior gold producer with industry-leading free cash
flow. The Arrangement is expected to provide Kirkland Lake
Gold with enhanced scale with pro forma 2019 production targeted at
approximately 1.5 million ounces of gold and analyst consensus 2019
free cash flow of almost US$700 million.
- Bolsters our financial
strength and capital markets profile. The combined net
cash balance of Kirkland Lake Gold and Detour Gold at September 30,
2019 was US$630 million. The increased public float, liquidity, and
access to capital, is expected to provide Kirkland Lake Gold with
greater capacity to pursue further growth, make strategic
investments to improve mining throughput and efficiency, and return
capital to shareholders.
- Increases Kirkland Lake
Gold’s Mineral Reserve base and complements our existing operating
profile. The Arrangement is expected to add to Kirkland
Lake Gold’s Mineral Reserve base and extend our Mineral Reserve
life index by eight years.
- Enables value-creation
through continued optimization and potential expansion of the
Detour Lake mine. The financial strength and technical
expertise of Kirkland Lake Gold is expected to support the
continued optimization and potential expansion of the Detour Lake
mine with opportunities to significantly increase production at
improved unit costs and to expand current Mineral Reserves and
Mineral Resources.
- Provides attractive
exploration upside. Detour Gold’s land position covers
approximately 1,040 km2 along the northernmost sections of the
Abitibi Greenstone Belt (including approximately 646 km2 on the
existing Detour Lake property) in Ontario, Canada. The combination
of free cash flow generating operations, significant in-mine growth
potential and considerable regional exploration upside is a common
feature among the Detour Lake mine and the Macassa mine in Canada
and the Fosterville mine in Australia.
- Delivers significant
potential synergies. The Arrangement is expected to
generate approximately US$75-US$100 million in annual pre-tax
synergies.
- Creates immediate
value. The Arrangement is expected to deliver cash flow
per share and net asset value per share accretion to Kirkland Lake
Gold.
KIRKLAND LAKE GOLD MEETING
The Meeting is scheduled for 11:00 a.m. (Toronto
time) on January 28, 2020 at TSX Exchange Tower, 130 King Street
West, Toronto, Ontario, Canada M5X 1C9. At the Meeting, Kirkland
Lake Gold shareholders will be asked to consider and vote on an
ordinary resolution authorizing the issuance by the Company of up
to 77,407,217 Kirkland Lake Gold common shares pursuant to the
Arrangement.
ADDITIONAL DETAILS
The Company’s management information circular
outlines the benefits for Kirkland Lake Gold shareholders and the
risks related thereto and provides details about the Arrangement,
including details on how shareholders can vote their Kirkland Lake
Gold shares.
For a more detailed description of the
Arrangement, readers should review the Company’s management
information circular and visit
www.klgold.com/detouracquisition.
SHAREHOLDER QUESTIONS AND
ASSISTANCE
If you have any questions or require assistance
voting your shares, please contact Kingsdale Advisors, the
Company’s strategic shareholder advisor and proxy solicitation
agent, by telephone at 1.877.659.1821 toll-free in North America
(+1.416.867.2272 for collect calls outside of North America) or by
e-mail at contactus@kingsdaleadvisors.com, or your professional
advisor.
None of the securities to be issued pursuant to
the Arrangement have been or will be registered under the United
States Securities Act of 1933, as amended (the “U.S.
Securities Act”), or any state securities laws, and any
securities issuable in the Arrangement are anticipated to be issued
in reliance upon available exemptions from such registration
requirements pursuant to Section 3(a)(10) of the U.S. Securities
Act and applicable exemptions under state securities laws. This
press release does not constitute an offer to sell or the
solicitation of an offer to buy any securities.
About Kirkland Lake Gold
Ltd.
Kirkland Lake Gold Ltd. is a growing gold
producer operating in Canada and Australia that produced 723,701
ounces in 2018 and is on track to achieve significant production
growth in 2019, to 950,000 – 1,000,000 ounces. The production
profile of the Company is anchored by two high-grade, low-cost
operations, including the Macassa Mine located in Northern Ontario
and the Fosterville Mine located in the state of Victoria,
Australia. Kirkland Lake Gold’s solid base of quality assets is
complemented by district scale exploration potential, supported by
a strong financial position with extensive management
expertise.
FOR FURTHER INFORMATION PLEASE CONTACT
Media Contact:
Ian Robertson, Executive Vice President, Communication Strategy
Kingsdale Advisors Direct: +1 416-867-2333, Cell: +1
647-621-2646irobertson@kingsdaleadvisors.com
Kirkland Lake Gold Ltd.
Anthony Makuch, President, Chief Executive Officer &
Director Phone: +1 416-840-7884 E-mail: tmakuch@klgold.com
Mark Utting, Vice-President, Investor Relations Phone: +1
416-840-7884 E-mail: mutting@klgold.com
The Toronto Stock Exchange has neither reviewed
nor accepts responsibility for the adequacy or accuracy of this
news release.
Cautionary Note Regarding
Forward-Looking Information
This press release contains statements which
constitute “forward-looking information” within the meaning of
applicable securities laws, including statements regarding the
plans, intentions, beliefs and current expectations of Kirkland
Lake Gold with respect to future business activities and operating
performance. Forward-looking information is often identified by the
words “may”, “would”, “could”, “should”, “will”, “intend”, “plan”,
“anticipate”, “believe”, “estimate”, “expect” or similar
expressions and include information regarding: (i) expectations
regarding timing of the Meeting, (ii) expectations regarding
whether the proposed Arrangement will be consummated, (iii)
expectations regarding the potential benefits and synergies of the
Arrangement and the ability of the combined company to successfully
achieve business objectives, including integrating the companies or
the effects of unexpected costs, liabilities or delays, (iv)
expectations regarding a potential increase to Kirkland Lake Gold’s
Mineral Reserve base and future production, (v) expectations
regarding Kirkland Lake Gold’s financial strength, free cash flow
generation and capital markets profile following completion of the
Arrangement, (vi) expectations regarding future exploration,
development and growth potential for Kirkland Lake Gold’s and
Detour Gold’s operations, and (vii) expectations for other
economic, business, and/or competitive factors.
Investors are cautioned that forward-looking
information is not based on historical facts but instead reflect
Kirkland Lake Gold’s management’s expectations, estimates or
projections concerning future results or events based on the
opinions, assumptions and estimates of management considered
reasonable at the date the statements are made. Although Kirkland
Lake Gold believes that the expectations reflected in such
forward-looking information are reasonable, such information
involves risks and uncertainties, and undue reliance should not be
placed on such information, as unknown or unpredictable factors
could have material adverse effects on future results, performance
or achievements of the combined company. Among the key factors that
could cause actual results to differ materially from those
projected in the forward-looking information are the following: the
ability to consummate the Arrangement; the ability to obtain
requisite court, regulatory and shareholder approvals and the
satisfaction of other conditions to the consummation of the
Arrangement on the proposed terms and schedule; the ability of
Kirkland Lake Gold and Detour Gold to successfully integrate their
respective operations and employees and realize synergies and cost
savings at the times, and to the extent, anticipated; the potential
impact of the Arrangement on exploration activities; the potential
impact of the announcement or consummation of the Arrangement on
relationships, including with regulatory bodies, employees,
suppliers, customers and competitors; the re-rating potential
following the consummation of the Arrangement; changes in general
economic, business and political conditions, including changes in
the financial markets; changes in applicable laws; compliance with
extensive government regulation; and the diversion of management
time on the Arrangement. This forward-looking information may be
affected by risks and uncertainties in the business of Kirkland
Lake Gold and market conditions. This information is qualified in
its entirety by cautionary statements and risk factor disclosure
contained in filings made by Kirkland Lake Gold with the Canadian
securities regulators, including Kirkland Lake Gold’s annual
information form, financial statements and related MD&A for the
financial year ended December 31, 2018 and its interim financial
reports and related MD&A for the period ended September 30,
2019 filed with the securities regulatory authorities in certain
provinces of Canada and available at www.sedar.com.
Should one or more of these risks or
uncertainties materialize, or should assumptions underlying the
forward-looking information prove incorrect, actual results may
vary materially from those described herein as intended, planned,
anticipated, believed, estimated or expected. Although Kirkland
Lake Gold has attempted to identify important risks, uncertainties
and factors which could cause actual results to differ materially,
there may be others that cause results not to be as anticipated,
estimated or intended. Kirkland Lake Gold does not intend, and does
not assume any obligation, to update this forward-looking
information except as otherwise required by applicable law.
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