Kinross Gold Corp
Kinross Gold Corporation was established in 1993 and has since grown to become the third largest primary gold producer in North America by reserves. Based in Canada, with nine mines in stable countries including the United States, Brazil, Chile and Russia, Kinross employs more than 5,000 people worldwide.
Kinross’ core purpose is to lead the world in generating value through mining. With a growing reserve base, production that is expected to increase 60% over 2007 levels by 2009 and cash costs that are expected to improve as new growth projects come into production.
Kinross’ strategic focus is to deliver disciplined growth that increases margins and cash flow per share by delivering solid performance from our assets, focusing on best talent and best teams, establishing the building blocks for the future, and driving future value.
Kinross Gold takes a bet on Ecuador and offers $1.2 billion for Aurelian Resources
Shareholders spoke with their feet today after Kinross Gold Corp (TSX:K ; NYSE: KGC) announced a friendly takeover of Aurelian Resources (TSX: ARU) for C$1.2 billion. Shares in Kinross fell 10.2% on the announcement, while Aurelian leapt 42%.
Kinross Gold is no mug however, and despite the less than rapturous applause from the stock market, must believe that the 63% premium it is offering Aurelian shareholders will pay off in the long run.
Aurelian Resources is one of the great success stories of the past decade, going from a mining exploration minnow focused on gold exploration in Ecuador, to discovering Fruta del Norte, a 13.7 million ounce gold and 22 million ounce silver deposit (approximately 14.1 million ounces gold equivalent). The size of the discovery lead to a huge land grab in the country by mining groups. This in turn appears to have pushed Ecuador to take a more cautious stance towards the exploitation of its mineral resources. Through no fault of its own, Aurelian went from a ten dollar stock to a four dollar stock in a short space of time, as investors headed for the exit after Ecuador changed its tone towards new mining developments.
Today, Kinross Gold argued that the deal was a “compelling combination”, and would add a substantial gold deposit to its development portfolio. Kinross already has substantial operating and exploration interests in Russia, Chile, Brazil and North America. Kinross Gold is also no stranger to substantial acquisitions, having acquired Bema Gold in 2007 for $3.1 billion.
"For Kinross, the combination demonstrates our continued commitment to
long-term, disciplined growth through maintaining a pipeline of high-quality development projects. This deposit will add significantly to our mineral resource base. We intend to pursue a focused strategy to further define the deposit, and believe that this combination can make an important contribution to our future” said Kinross’ President and CEO Tye Burt.
Investors appeared more worried that Kinross was picking up a project in a country that most mining companies had given up on. However, Kinross has an excellent track record of moving projects into production, and appears unfazed by the challenges.
"Kinross is committed to responsible mining and has an excellent track
record of working cooperatively with governments and communities wherever we operate” added Kinross President and CEO Tye W. Burt.
Kinross and Aurelian have agreed to a break clause of $42 million, should Aurelian receive a superior proposal and choose to walk away from the current offer. Kinross also agreed to a private placement, taking 15 million shares in Aurelian at $4.75 per shares, putting C$71 million in Aurelian’s coffers.