Kirkland Lake Gold has agreed to merge with Agnico Eagle Mines to create a gold mining company with a $US26.1 billion ($36 billion) market capitalisation.
The two companies will join forces under the Agnico Eagle Mines name to establish the industry’s highest-quality senior gold producer.
Kirkland Lake and Agnico Eagle’s combined mineral reserve base contains 38 million ounces of gold at 969 million tonnes at 1.53 grams per tonne and $US2.3 billion of liquidity.
Both companies’ board of directors have unanimously approved the merger which is expected to be completed in December 2021 or the first quarter of 2022.
Kirkland Lake Gold operates the Fosterville gold mine in Victoria, Australia, which is one of the country’s largest gold mining operations.
However, the merger will focus on consolidating the Abitibi greenstone belt in Canada which will enhance the synergies of both companies.
“We are very pleased and excited to be entering into a combination with Agnico Eagle. It is a unique ‘strength-on-strength’ transaction that combines the two global gold producers with the best track records for increasing per share value,” Kirkland Lake president and chief executive officer Tony Makuch said.
“The deal creates an industry leader with a dominant position in the Canadian market that is deserving of a premium valuation and is poised to generate superior long-term shareholder value going forward.
“The transaction represents a true merger of equals, with the business of both companies to benefit from the significant financial strength of the merged company, the extensive pipeline of development and exploration projects to drive future growth, and the potential to realise significant operational and strategic synergies along the Abitibi-Kirkland Lake corridor.”
Kirkland Lake and Agnico’s combined production in 2021 is around 3.4 million ounces with the merged entity to have the lowest all-in sustaining cost per ounce among other senior gold producers.
The merged company’s board will contain seven directors from Agnico Eagle and six from Kirkland Lake, with the senior management team including Makuch as chief executive officer.
Canada-based Agnico Eagle is the largest gold miner in the country.
“Over time, we believe that the gold industry will continue to evolve and consolidate, and with this transaction we are well positioned to take advantage of high-quality opportunities and be a true Canadian mining champion,” Agnico Eagle chief executive officer Sean Boyd said.