Referring to a story by Reuters last week, Canadian miner Kirkland Lake Gold have confirmed that a shareholders meeting last week resulted in a unanimous vote in favour of a takeover of Australian firm Newmarket Gold.
In a joint statement, the two firms revealed that 99 percent of Newmarket shareholders and 83 percent of Kirkland shareholders were in favour of the deal. In order for the agreement to be finalized the board needed 70 percent of Kirkland support and over half of Newmarket support. The deal is thought to be worth around $800 million and should be finalized by the end of the month.
Newmarket shares dropped 0.4 percent to C$3.43 in response to the news and Kirkland Lake fell 1.7 percent to C$7.19 on the Toronto Stock Exchange.
This deal comes hot on the heels of a tie-up involving Kirkland and St Andrew Goldfields in February in an all-stock transaction valued at C$182 million. The agreement created an entity with four Ontario-based mines and three mills.
Kirkland Lake's largest shareholder, Van Eck Associates, said to Reuters that it supported the deal but declined to give details on how it eventually voted. Many other shareholders were vocal in their opposition to the deal as they saw minimal expansion opportunities and efficiency saving with both companies having their main assets in different countries. Newmarket has most of theirs in Australia.
“There’s a feeling with a small minority of the Kirkland shareholders that the board were a little too quick to dismiss their own buyout offers,” said James Coleman, Managing Director and co-head of Portfolio Trading at Softbank CIBC International in a note to clients.
“Both Silver Standard Resources and Gold Fields made attractive offers but both were withdrawn last week,” Coleman added.
The board cited increased analyst coverage and valuation for going through with the Newmarket takeover and the new combined company will operate five mills and eight underground mines which output over 600,000 ounces of gold this year. The main operations will be Newmarket's Fosterville mine in Victoria, Australia, and Kirkland Lake's Macassa mine in Ontario.
The board are expected to make a further announcement at the start of December concerning further details on the deal.
