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Shareholders at both Detour Gold Corp. and Kirkland Lake Gold Ltd. voted decisively in favour of Kirkland’s $4.9-billion acquisition of Detour on Tuesday, in a deal that sees the world’s most profitable large gold mining company buy a struggling single-asset producer smack in the middle of a turnaround.
The all-stock acquisition was announced in November and was initially greeted with shock on the part of many of Toronto-based Kirkland Lake’s shareholders, with its stock plummeting by 17 per cent on the day the deal was announced.
Some big stakeholders, such as Eric Sprott, weren’t immediately convinced of the logic of Kirkland, a low cost, high grade miner, buying Detour, a high cost, low grade operator.
But a big part of the reason Kirkland’s shareholders ultimately warmed up to the deal is that while the company will see its average cost to mine an ounce of gold rise after it integrates Detour, its reserves of gold in the ground will go up materially.
On Tuesday, even after Kirkland shareholders voted 99 per cent in favour of the acquisition, the company’s chief executive, Tony Makuch, said he was sorry for the lacklustre reception the deal had received from the market, and vowed the transaction will turn out to be a winner over the long term.
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