Eric Sprott, out $140-million on Kirkland Lake Gold, undecided on deal with Detour Gold – by Niall McGee (Globe and Mail – November 27, 2019)

Kirkland Lake Gold Ltd.’s plan to acquire Detour Gold Corp. has been costly for Eric Sprott. How costly?

“I think my loss is $140-million,” the maverick gold investor said of the drop in value of his investment in Kirkland Lake in the two days since it announced its all-stock deal to acquire Detour. Mr. Sprott, who is Kirkland’s second-biggest shareholder, said this is also the biggest investment loss of his career, in such a short time period.

On Monday, Toronto-based Kirkland, one of the world’s most profitable gold companies, shocked the market by announcing it planned to buy struggling low-grade miner Detour Gold Corp. for $4.9-billion. Investors immediately soured on the deal. Kirkland Lake shares have lost about 16 per cent of their value since Monday.

Shareholders will vote on the deal in January. A majority is needed for the deal to be approved. At the moment, Mr. Sprott says he isn’t sure which way he’s going to vote. He says he has to do a lot more homework to see if management is correct in its thesis that Detour can eventually be very profitable.

But he’s convinced Kirkland would lose the vote if it was held today, based on the market’s reaction.“If you had a vote of shareholders today, they’d vote it down, said Mr. Sprott, owner of more than 13 million shares in Kirkland Lake.

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