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  • Major gold producer Kirkland Lake Gold (ASX:KLA) is buying Canada-based Detour Gold in a $5.4 billion deal
  • Shareholders are responding negatively to the news with Kirkland seeing $10 wiped off its share price on the Australian market
  • The company is facing a similar fate on the Toronto and New York exchanges with both seeing Kirkland’s share price plummet over 17 per cent each
  • Buying Detour gives Kirkland access to a gold mine which produces over 650,000 ounces of gold annually
  • On the ASX, shares in Kirkland are now trading for $59.99 each

Major gold producer Kirkland Lake Gold has seen its share price suffer on the Australian market after revealing its purchase of Canada-based Detour Gold.

In a $5.4 billion dollar buy (C$4.9 billion) Kirkland will assume all shares in the fellow gold explorer who is listed on the Toronto Stock Exchange. Shares in Detour are currently trading for C$22.61 and saw a 1.8 per cent growth during yesterday’s trade.

However, Kirkland is facing a different reaction from shareholders.

On the Australian exchange the gold explorer has lost $10 from its share price today, as midday trade approaches. This accounts for a 14.29 per cent loss bringing individual share value to $59.99 each.

On the Toronto exchange Kirkland shed C$10.94 from its share price following a 17.28 per cent plummet. A similar fate followed on the New York exchange, a 17.2 per cent hit was taken to its share price and which wiped off US$8.19.

The purchase of Detour Gold will give Kirkland access to the Detour Lake Mine which roughly producers 659,000 ounces of gold annually. The mine also comes with a 22 year lifespan.

In its release to the Australian market today, Kirkland outlined that an additional 15.4 million ounces will be added to the company’s mineral reserves. On top of this, yearly gold production is forecast to continue growing.

This year, gold production is expected to fall between 950,000 to one million ounces. By 2021 this is forecast to reach nearly 1.06 million ounces of gold.

Kirkland Lake’s CEO, Tony Makuch, explained the purchase of Detour compliements its earlier purchases of the Macassa and Fosterville mines. Macassa is located in Ontario, Canada and produced 240,126 ounces of gold last year. Fosterville is located in Victoria, Australia and produced 356,230 ounces of gold in 2018.

“The addition of Detour Lake provides an opportunity to add a third cornerstone asset that is located in our back yard in Northern Ontario,” Tony said.

Going forward, Kirkland intends to further expand exploration at Detour’s assets to capitalise on new gold opportunities.

“We are planning extensive drilling at highly prospective exploration targets within the 1,040 km2 Detour Gold land position, where we believe there is considerable potential for new discoveries to support future mineral resource growth,” Tony added.

KLA by the numbers
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