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MINING NEWS: Kinross and Bema ready to tie the knot
Kinross Gold, the owner of Alaska’s Fort Knox mine, will expand its operations in Russia and elsewhere in the world if a friendly acquisition of Bema Gold goes ahead. The boards of directors of the two Canadian companies unanimously approved the U.S. $3.1 billion transaction in early November, and they are now awaiting a vote by Bema shareholders, scheduled for January. Two-thirds of the smaller company’s shareholders must give their approval of the deal for it to go ahead.
After the acquisition, the remodeled Kinross would own nine mines in five countries, with around 4,700 employees. Assets from Bema would include the Julietta mine in Magadan and the Kupol project in Chukotka, both of which are in the Russian Far East. For the first nine months of 2006 Julietta produced 70,868 ounces of gold at a total cash cost of $306 per ounce. Kupol is under construction and set to be in production in June 2008. Kinross already has experience in the Russian Far East, having operated the now-closed Kubaka mine in Magadan.
Gold reserve of more than 50 million ounces “The acquisition will create exceptional value for shareholders,” said Tye Burt, president and CEO of Kinross. “By combining our assets, operations and expertise, we have dramatically increased our gold reserve and resource base to more than 50 million ounces. We will have a well-balanced gold reserve profile with 39 percent in Chile, 37 percent in Brazil, 16 percent in North America and 8 percent in Russia.”
“We believe that our companies are a great fit due to complementary strengths, geographic synergies and similar growth profiles,” said Clive Johnson, Bema’s president and CEO. “Bema shareholders are getting an attractive premium to become part of a stronger company that will create near- and long-term value for all shareholders. Further, we expect that the combined company will be re-rated in the market once the transaction is complete.”
The transaction would exchange each Bema common share for 0.441 of a Kinross common share, representing a 34 percent premium to the 20-day volume weighted average price of Bema common shares on the Toronto Stock Exchange. As part of the arrangement, Clive Johnson would lead a new company focused on exploration and development. Kinross would participate as an equity investor and have a right to participate in joint venture opportunities with the new company in Russia.
—Sarah Hurst
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