Kinross buys Great Bear Resources

By Dominic Ellis
Kinross will acquire Great Bear’s flagship Dixie project in the Red Lake mining district in Ontario, which it believes has excellent potential

Kinross Gold Corporation has entered into a definitive agreement to buy all the issued and outstanding shares of Great Bear Resources.

Through the deal, Kinross acquires Great Bear’s flagship Dixie project in the Red Lake mining district in Ontario, Canada, which it believes has "excellent potential" to become a top tier deposit. It is located 25kms southeast of the town of Red Lake and comprises 91sq kms of contiguous claims.

Under the terms of the Transaction, Kinross has agreed to an upfront payment of approximately US$1.4 billion1 (C$1.8 billion), representing C$29.00 per Great Bear common share on a fully-diluted basis. The upfront payment will be payable at the election of Great Bear shareholders in cash and Kinross common shares, subject to a pro-ration, up to aggregate maximums of 75% cash and 40% Kinross shares on a fully-diluted basis.

The Agreement also includes a payment of contingent consideration in the form of contingent value rights that may be exchanged for 0.1330 of a Kinross share per Great Bear common share, providing further potential consideration of approximately US$46.0 million (C$58.2 million) based on the closing price for a Kinross share on the Toronto Stock Exchange on December 7.

The contingent consideration will be payable in connection with Kinross’ public announcement of commercial production at the Dixie project, provided that at least 8.5 million gold ounces of measured and indicated mineral resources are disclosed.

The most significant discovery to date at Dixie is the large-scale 'LP Fault' zone, which is consists of continuous wide, moderate grade mineralization along with subparallel high-grade gold lenses, forming a broad 200-400 metre wide envelope of stacked zones, hosted in metamorphosed felsic volcanic and sedimentary units. 

Strategic rationale for acquisition

  • The Dixie project could support a large, long-life mine complex and bolster Kinross’ long-term production outlook.
    • Kinross envisions a mine complex with an initial quality, high-grade open-pit mine, with potential upside for a longer-term, sizeable underground operation.  
  • Dixie has significant exploration upside potential with primary zones of mineralization remaining open along strike and at depth.
    • Highly-prospective, with multiple avenues to unlock potential, including the LP Fault, Hinge and Limb primary zones.
    • Positive and exciting drilling results show consistently wide mineralised intercepts defining large continuous zones with predictable high-grade components.
  • Dixie is ideally located in a highly-attractive jurisdiction and is situated in the renowned Canadian Red Lake mining district in Northern Ontario.
    • The project is in a well-established mining camp close to infrastructure and skilled labour.
    • The project offers the potential for long-term tax benefits given Kinross’ large Canadian tax pools.
    • Power supply sources in the region are from a low-carbon energy grid, supporting the Company’s greenhouse gas emissions reduction strategy.   
  • Kinross has been actively involved in the diligence of the Dixie property since 2018 and the asset will become a centerpiece in the Company’s development portfolio.
    • Extensive technical reviews, including site visits, support an exceptional outlook for the project and confirms it is a scarce, high-quality asset.

J. Paul Rollinson, Kinross’ President and CEO, said the Dixie project represents an exciting opportunity to develop a potentially top tier deposit into a large, long-life mine complex.

"In addition to the prospect of developing a quality, high-grade open pit mine, we also believe that a significant portion of the asset’s value is its longer-term potential, which includes the view of a sizeable underground operation," he said.

“Kinross has the strong technical expertise and experience to successfully advance the project from exploration to development and unlock considerable value for our shareholders. Our extensive due diligence reinforced the scarcity of an asset of this quality and value. The Dixie project has multiple high-potential mineralised zones which remain open along strike and at depth, and we are confident that the asset has strong untapped upside with numerous avenues for growth."

“We are pleased to achieve our goal of adding a high-quality asset in our home jurisdiction that further bolsters our global portfolio and can potentially provide long-term tax benefits. The Dixie project is ideally located in the renowned Red Lake mining district in Northern Ontario near established infrastructure and in a province with a low-carbon energy grid. We look forward to building strong relationships with the Wabauskang and Lac Seul First Nations and will work with them to ensure that the project delivers sustainable benefits to their communities and respects their way of life.”

Chris Taylor, Great Bear’s president and ceo, said Kinross first set foot on the Dixie property three years ago, and has closely monitored the discovery and growth of each successive gold discovery Great Bear has made.

With extensive drilling now completed at Dixie, both companies have a shared vision of the clear potential for a multi-deposit mine complex consisting of a potential high-grade open-pit mine and a long-life underground mine.

Dixie’s closest geological analog, the large Hemlo gold mine, was historically operated by three separate companies prior to its consolidation, and has produced over 20 million ounces of gold in more than 30 continuous years of operation.

"Great Bear shareholders will now be in a unique position to benefit from the potential of the top tier Dixie project under one company and will maintain strong exposure to the project through their Kinross shares," he said. 

“The Dixie project hosts a prolific gold system that remains completely unconstrained and open to extension. In the near-term, with over 80% of the property unexplored, our shareholders will continue to have exposure to ongoing advanced project development and extensive exploration upside in the lead-up to planned production.

Of high importance to Great Bear is Kinross’ history of strong Indigenous community relationships and industry recognition as a leader in sustainability and environmental stewardship, he added.

"Our partners at the Wabauskang and Lac Seul First Nations will benefit from Kinross’ deep operational experience, excellent operational track record and headquarters in Ontario. Kinross is committed to ensuring the project provides lasting socio-economic benefits to the local area and the shared Canadian identity and residence in the same province will help facilitate close ties between the Company and the project’s local communities.”

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