Kinross Gold to acquire Great Bear in $1.8 billion deal
Kinross Gold Corp. (K-TSX, KGC-NYSE) has agreed to acquire Great Bear Resources Ltd. [GBR-TSXV] and its 100%-owned Dixie Project which is located in the Red Lake Mining District of northwestern Ontario.
Kinross said it is going ahead with the deal in the belief that Dixie has significant potential to become a top tier deposit that could support a long-life mine complex and bolster Kinross’ long-term production outlook.
“In addition to the prospect of developing a quality, high-grade open pit mine, we also believe that a significant portion of the asset’s value is its longer-term potential, which includes the view of a sizeable underground operation,” said Kinross President and CEO J. Paul Rollinson.
“The Dixie project is ideally located in the renowned Red Lake mining district in Northern Ontario near established infrastructure and in a province with a low-carbon energy grid,” he said.
Under the terms of the transaction, Kinross has agreed to an upfront payment of approximately $1.8 billion, worth $29 per Great Bear common shares on a fully diluted basis.
The upfront payment will be payable at the election of Great Bear shareholders in cash and Kinross common shares, subject to a pro-ration, up to aggregate maximums of 75% cash and 40% Kinross shares on a fully-diluted bases.
The agreement also includes a payment of a contingent consideration in the form of contingent value rights that may be exchanged for 0.1330 of a Kinross per Great Bear common share, providing further potential consideration of $58.2 million based on the closing price of Kinross shares on the Toronto Stock Exchange on December 7, 2021.
The contingent consideration will be payable in connection with Kinross’ public announcement of commercial production at the Dixie project, provided that at least 8.5 million gold ounces of measured and indicated mineral resources are disclosed.
The deal was announced after the close of trading on December 8, 2021, when Great Bear shares closed at $22.93, leaving the company with a market cap of $1.32 billion, based on 57.8 million shares outstanding. The shares previously traded in a 52-week range of $22.96 and $12.80.
Great Bear is focused on the prolific Red Lake district, where the company controls over 190 square kilometres of prospective tenure across four projects, with Dixie being widely recognized as the largest new gold discovery in Canada.
The junior is currently in the process of completing a significant exploration drill program to define the mineralization within a large-scale, high-grade disseminated gold discovery made in 2019, the LP Fault.
It is also compiling all historical date together with incoming assay results, with the goal of publishing an initial multi-million-ounce mineral resource estimate.
The company recently said it had completed 721 drill holes, identifying five high-grade gold discoveries. They include the LP Fault zone as well as the nearby Hinge, Limb, Midwest and Arrow gold zones.