Gold deal making heating up as Kirkland Lake swallows Newmarket

A proposed merger between two Canada-based gold miners is the latest example of consolidation in an industry that remains under pressure to cut costs, even as stronger gold prices smooth the way for deal-making.

Today Kirkland Lake Gold Inc. agreed to buy Newmarket Gold Inc. in an all-stock deal valued at C$1.01 billion (US$770 million), creating what the companies said will be a low-cost producer focused on Canada and Australia.

"It certainly fits with the theme of looking at junior and intermediate producers trying to move up the food chain, creating a new tier of intermediate producers nipping at the heels of the senior producers," Michael Siperco, an analyst with Macquarie Capital Markets in Toronto, said by telephone.

Deal making in the gold industry this quarter is the busiest in a year by volume of transactions, according to data compiled by Bloomberg, as surging metal and stock prices give companies more scope to grow through acquisitions. ...

Kirkland Chief Executive Officer Tony Makuch will lead the company and sit on its board, while Kirkland Chairman Eric Sprott will have the same title in the combined company. Sprott is also a major shareholder in Newmarket, holding 13.5 percent of shares outstanding, according to data compiled by Bloomberg, which also shows him holding 6.7 percent of Kirkland’s outstanding shares.

The deal was unanimously approved by both boards, with the exception of Sprott, who didn't vote, the companies said. ...

... For the remainder of the report:

http://www.bloomberg.com/news/articles/2016-0...grees-to-buy...