Toronto-based gold miner Kinross Gold Corporation will bolster its bullion production with a $7.1 billion all-share purchase of fellow Canadian firm Red Back Mining Inc., according to a press release from Kinross announcing the deal.
Canada’s Osler, Hoskin & Harcourt represented Kinross on the acquisition, according to the release. The firm has advised Kinross before–in 2008, it handled a $1.2 billion all-share purchase of Aurelian Resources Inc., a precious metals company based in Ecuador.
Osler partner Douglas Bryce advised Kinross, along with associate James Brown, according to Blake, Cassels & Graydon partner Peter O’Callaghan, who advised Red Back on the deal.
Kinross expects the acquisition will add more than 445,000 ounces of Red Back bullion to its 2010 production forecast, and will bolster its position in West Africa, described in the release as “one of the world’s fastest-growing and most-prospective gold regions.”
Red Back owns and operates two mines in West Africa–the Tasiast mine in Mauritania and Chirano mine in Ghana–with combined proven reserves of more than 8 million ounces as of June 1.
Blake Cassels, says O’Callaghan, has represented Red Back since 2004, when the then-Australian company migrated to Canada and in 2003 merged with Blake client Champion Resources Inc.
“Essentially, this particular deal started on Friday afternoon,” O’Callaghan says of the acquisition. “Right after the close of the market.” But the discussions that led to the deal started in January, says O’Callaghan, who also advised Red Back when Kinross agreed to purchase a 9.4 percent stake in Red Back for $586 million in May.
The Blake Cassels team also included partners Steven McKoen, Trisha Robertson, Michelle Audet, Bruce Sinclair, Jason Gudofsky, and associates Warren Beil and Jamie Kariya.
Both Kinross and Red Back now await a mid-September Red Back shareholder vote on the deal. (Both companies’ boards unanimously approved the purchase.)
Gold-based takeovers are nothing new this year, Bloomberg reported Tuesday. The Kinross purchase pushed the value of 2010 gold deals to $32 billion, more than twice the industry’s M&A total from last year–a sign of the difficulty producers face to expand organically, turning instead to acquisitions. Gold discoveries, Bloomberg reported, have dropped by 4 million ounces a year for the past three decades.
Gold prices hit a record high of $1,265 an ounce in late June, according to data compiled by The Wall Street Journal. Bullion prices currently hover just below $1,200.
This article first appeared on The Am Law Daily.
