Kinross said the agreed all-share acquisition would match its own high-quality mines and proven track record with Red Back’s early-stage projects and potential for expansion.
According to Kinross, analysts expect the combined company’s annual gold production to reach about 3.9m ounces after Red Back’s two key projects in Ghana and Mauritania come on stream in 2015. In comparison, Barrick Gold, the world’s biggest producer, estimated last week that its output would total between 7.6m and 8.1m ounces this year.
The acquisition follows a well-worn pattern in the gold mining industry in which entrepreneurial exploration companies seek capital and expertise from more seasoned operators to develop their mineral deposits. Kinross took a 9.4 per cent stake in Red Back earlier this year.
Under the proposed deal, Red Back shareholders will receive 1.778 Kinross common shares and 0.110 of a Kinross common share purchase warrant for each Red Back share. Current Kinross shareholders will own about 63 per cent of the combined company.
Lukas Lundin, Red Back’s chairman, and Richard Clark, chief executive, will join the Kinross board.
Internationally recognized as leaders in identifying superior investment opportunities in the natural resource sector, the Lundin Group’s endeavors have led the development of several world class mineral deposits and significant gains for shareholders who participated in their ventures.
Renown for their foresight and their ability to identify highly prospective properties The Lundin Group, led by Lukas Lundin, acquired their stake in Newstrike in advance of the recent activity in the Guererro Gold Belt as demonstrated by Torex Gold’s acquisition of interests in the Morelos Project from Teck Resources Limited and Goldcorp Inc.