Detour Gold premium vanishes as investors dump Kirkland Lake shares amid takeover – by Niall McGee (Globe and Mail – November 25, 2019)

https://www.theglobeandmail.com/

Investors punished Kirkland Lake Gold Ltd. after the underground mining company said it will acquire struggling open pit specialist Detour Gold Corp. in an all-stock deal valued at about $4.9-billion. Toronto-based Kirkland Lake is paying 0.4343 Kirkland shares for each Detour Gold share, a 24-per-cent premium to Friday’s closing price.

But that premium all but vanished in trading Monday on the Toronto Stock Exchange. Kirkland Lake closed down 17.3 per cent on the Toronto Stock Exchange to $52.38 apiece. Detour closed up 1.8 per cent to $22.61 apiece.

Kirkland Lake has been the gold industry’s best-performing senior gold miner over the past three years, thanks in part to the spectacular performance of its high-grade Fosterville mine in Australia.

By contrast, Detour, also based in Toronto, has struggled for most of its existence. Its low-grade open pit mine in Detour Lake in Northern Ontario went into production in 2013 and, until recently, was known as a poorly managed, high-cost operation.

Fahad Tariq, analyst with Credit Suisse, wrote in a note to clients that the acquisition “increases Kirkland Lake’s overall cost profile, and importantly raises concerns about potentially weaker exploration updates coming at Fosterville.”

For the rest of this article: https://www.theglobeandmail.com/business/industry-news/energy-and-resources/article-kirkland-lake-buying-detour-gold-in-all-stock-deal-worth-49-billion/