|Bid||23.95 x 0|
|Ask||23.97 x 0|
|Day's Range||23.75 - 24.56|
|52 Week Range||9.91 - 25.45|
|Beta (3Y Monthly)||0.23|
|PE Ratio (TTM)||469.22|
|Earnings Date||Nov 15, 2019|
|Forward Dividend & Yield||N/A (N/A)|
|1y Target Est||19.37|
(Bloomberg) -- Kirkland Lake Gold Ltd. Chief Executive Officer Tony Makuch faces an uphill battle convincing investors and analysts that he made the right decision in buying higher cost producer Detour Gold Corp.Toronto-based Makuch traveled to New York Tuesday to meet with investors as shares plummeted, wiping about $2 billion off his company’s market value so far this week. The cost to operate and sustain the Detour Lake mine was more than double that of Kirkland’s projects in the third quarter.Kirkland was the third-best performer on the Bloomberg Americas Mining Index this year through Friday, with shares climbing more than 80%, as the company cut costs and improved margins. That advantage, which sent shares to a record in September, withered away as the deal with Detour Gold fueled a sell-off while analysts downgraded the stock.“The acquisition adds to the near-term risk profile of the company” CIBC analysts including Cosmos Chiu said in a note, as they downgraded the Kirkland’s stock to neutral from outperform. Detour “is only about half way through the optimization of its operations (including cost savings), and we see risk of a potential slowdown in progress at the mine.”Kirkland can cut the project’s all-in sustaining cost down to as low as $800 an ounce, from $1,198 in the third quarter, according to the CEO. Output at Detour Lake will rise by half to 900,000 ounces a year, from its current level, Makuch said in an interview at the Bloomberg headquarters in New York Tuesday.“When you increase the amount, the margin goes up,” Makuch said in a separate Bloomberg Television interview. “When we talk about what you do with M&A, you are looking for value other people did not see. We have to do work to create that value but we see opportunity to create value not recognized yet.”While CIBC analysts saw the long-term merits of the acquisition which could add a third “cornerstone mine” to Kirkland’s asset base, the market is still awaiting “confirmation of KL’s ability to operate an open pit asset,” they said, referring to the company by its exchange ticker.Kirkland shares fell 2.7% at 12:55 p.m. in New York, taking the company’s market value to about $8 billion. That shrank from $10 billion on Friday, the last trading day before the Detour deal was announced.\--With assistance from Alix Steel and Steven Frank.To contact the reporters on this story: Joe Deaux in New York at firstname.lastname@example.org;Aoyon Ashraf in Toronto at email@example.com;Yvonne Yue Li in New York at firstname.lastname@example.orgTo contact the editors responsible for this story: Luzi Ann Javier at email@example.com, Joe RichterFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
(Bloomberg) -- Kirkland Lake Gold Ltd. Chief Executive Officer Tony Makuch was quick to assuage investors that the planned C$4.9 billion ($3.7 billion) acquisition of Detour Gold Corp. won’t boost the company’s cost after shares tumbled.Shares of Canada’s Kirkland Lake slumped 17% Monday, the worst since mid-July 2015, after announcing an all-share deal to buy Detour Gold, which operates the Detour Lake mine in Ontario. Detour Lake is expected to produce for more than 20 years and can generate 600,000 ounces a year.Gold mining acquisitions have surged since 2018 after Barrick Gold Corp.’s takeover of Randgold Resources Ltd., and Newmont Mining Corp.’s purchase of Goldcorp Inc. Consolidating the projects after the mergers hasn’t been easy for Newmont, which inherited a company saddled by growing pains as it integrates Goldcorp assets.In the case of Kirkland’s deal, the company will take on Detour Lake, whose cost is double that of the acquiring miner.“There’s significant benefit in terms of maintaining or reducing costs from current levels,” Makuch said in a telephone interview. “This is definitely a long-life asset that has potential to grow production and continue to be a long-life asset.”Kirkland has managed to cut its all-in sustaining cost or the cost to keep its mines in business by almost half to $562 an ounce in the third quarter, from three years earlier. That compares with a 15% gain in Detour’s cost of $1,198.Kirkland’s stock price has surged in the three years through Friday, climbing eight-fold, as profits soared. The shares have outstripped a 36% rise in the BI Global Senior Gold Valuation Peers index, and a 21% climb in gold prices over that same period.That has put the company in a strong position to expand. The Detour Lake gold mine is about the same size as Kirkland’s biggest project, the Fosterville mine in Australia.Bull RunIn the decade-long bull run that took prices of the precious metal to a record in 2011, companies bought assets in their rush to ramp up output to meet rising demand for the metal, accumulating debt to close those deals. As prices reversed and the metal languished in a bear market for years, investors hit the exit, leaving many miners unable to service their obligations and forcing them to cut cost to survive.A group of investors including the hedge fund founded by billionaire John Paulson and Egyptian billionaire Naguib Sawiris’s La Mancha had called on gold companies to unlock $13 billion in value through mergers and cost cuts.The group called the Shareholders’ Gold Council of 18 investors urged the mid-tier companies to pursue no-premium mergers to cut duplicate corporate structures and achieve economies of scale.The acquisition of Detour Gold “will increase Kirkland Lake’s overall cost profile,” Fahad Tariq, an analyst at Credit Suisse Group AG said in a note before trading started Monday. “It also raises concerns about potentially weaker exploration updates coming at Fosterville.”Slipping ValueDetour shareholders will receive 0.4343 share of Kirkland, according to the statement. After the deal is completed, existing Kirkland shareholders will own 73% of the new company, with Detour owners holding the rest. The agreement values Detour at C$27.50 a share, a 24% premium to the closing price on Friday, Kirkland said in a statement.After Kirkland shares plunged Monday, the value of the offer has fallen to C$22.75. Detour shares advanced 1.8% to C$22.61 in Toronto.Detour shares have almost doubled this year to become this year’s best performer on the Bloomberg Americas Mining Index, helped by a rally in gold prices. Paulson & Co. led an overthrow of the board in 2018 after a bitter proxy battle, in which he called for the company to put itself up for sale.The new entity would have gold production of about 1.5 million ounces in 2019 and free cash flow of $700 million, Kirkland said.(Closes shares in second and 14th paragraphs.)\--With assistance from Thomas Biesheuvel.To contact the reporter on this story: Joe Deaux in New York at firstname.lastname@example.orgTo contact the editors responsible for this story: Luzi Ann Javier at email@example.com, Joe RichterFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
Kirkland Lake Gold announced Monday that it would buy rival Detour Gold, following other big acquisitions and a rally in gold prices.
Bragar Eagel & Squire, P.C., a nationally recognized shareholder law firm, has launched an investigation into whether the board members of Detour Gold Corporation (Other OTC: DRGDF) breached their fiduciary duties or violated the federal securities laws in connection with the company's proposed sale to Kirkland Lake Gold Ltd.
The latest deal in a raft of gold sector consolidation adds a third major asset to Kirkland's portfolio, adding annual production of around 600,000 ounces. Kirkland offered 0.4343 share for each Detour Gold share, implying a value for Detour of about C$4.01 billion ($3.01 billion). Major gold miners Barrick Gold Corp and Newmont Goldcorp Corp have also bulked up to boost growth and replace shrinking reserves, stoking expectations of more deals among a dwindling group of mid-tier players.
* At 9:39 a.m. ET (1439 GMT), the Toronto Stock Exchange's S&P/TSX composite index was up 48.47 points, or 0.29%, at 17,003.31. * A Chinese state-backed newspaper said on Monday, Beijing and Washington were "very close" to an initial trade agreement, adding to optimism sparked by comments over the weekend by a U.S. trade adviser that a deal was still possible this year. * Detour Gold Corp jumped nearly 5% after bigger rival Kirkland Lake Gold Ltd agreed to buy the miner for about C$4.89 billion ($3.68 billion) in an all-stock deal.
Canadian miner Kirkland Lake Gold Ltd's shares fell as much as 16% in Toronto on Monday after investors reacted negatively to the hefty premium it agreed to pay to buy smaller rival Detour Gold Corp in an all-stock deal. The latest deal in a raft of gold sector consolidation adds a third major asset to Kirkland's portfolio, adding annual production of around 600,000 ounces. Kirkland offered 0.4343 share for each Detour Gold share, implying a value for Detour of about C$4.01 billion ($3.01 billion).
Transaction Creates: +1.5 Moz/year gold producer; combines large-scale, long-life Detour Lake Mine (“Detour Lake”) with high-grade Macassa and Fosterville minesIndustry leader.
Since Barrick Gold bought Randgold Resources and Newmont Mining swooped to acquire GoldCorp last year, analysts have been waiting for another flurry of dealmaking activity. Kirkland’s recommended offer for Detour, pitched at a 24 per cent premium to its closing price on Friday, will create a 1.5m ounce a year gold producer that will be big enough to appeal to mainstream fund managers.
Detour Gold Corporation reports its operational and financial results for the third quarter of 2019. All amounts are in U.S. dollars unless otherwise indicated.
It hasn't been the best quarter for Detour Gold Corporation (TSE:DGC) shareholders, since the share price has fallen...
Detour Gold Corporation plans to release its third quarter 2019 operating and financial results after market close on Thursday, November 14, 2019, followed by a conference call and webcast the following morning.
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The new Credit Facility replaces the Company's previous US$500 million senior secured credit facility, which was comprised of a US$200 million term loan (maturing July 14, 2020 ) and a US$300 million revolving credit facility (maturing July 14 , 2022). The new Credit Facility has a four-year term, maturing September 25, 2023 . The new Credit Facility includes two financial covenants: (i) a "Net Debt to EBITDA" (or "Leverage Ratio") covenant of 3.5x (unchanged as compared to the previous facility) and (ii) an "Interest Coverage" covenant of 3.0x (reduced from 3.5x under the previous facility). The interest rate for drawn borrowings ranges from Libor + 2.00% to 3.125% (reduced from Libor + 2.215% to 3.125% under the previous facility), depending on the Leverage Ratio.
While some investors are already well versed in financial metrics (hat tip), this article is for those who would like...