Thursday, 30 August 2012

Kirkland Lake Gold wraps up deal to buy remainder of former Queenston joint ventures

Kirkland Lake Gold (TSE:KGI)(AIM:KGI) said this morning that it has wrapped up its acquisition of Queenston Mining's (TSE:QMI) 50 per cent interest in the seven joint venture properties the two parties owned in the Kirkland Lake camp. 
The Ontario-focused gold miner paid $20 million at completion of the deal, bringing the total paid to date to $30 million. 
The final payment of $30 million is due to be paid by Kirkland on December 3 of this year, subject to satisfactory property title registrations for some of the properties, and government approvals. 
"We are delighted to have completed this strategically important acquisition," said company chairman, Harry Dobson. 
"We can now press ahead with a more aggressive surface and underground exploration program that supports our vision to build a 5+ million ounce gold inventory."
Kirkland Lake Gold operates in Kirkland Lake, Ontario, in the Southern Abitibi gold belt. The company plans on increasing its production to 250,000  to 300,000 ounces per year in several stages.
Last month, broker Investec said the company has the potential to be a "meaningful producer" for decades to come, and rated the stock a 'buy'.
Investec recently visited the firm's operations in Ontario, where there are plans to lift ore production to 2,200 tpd (from around 700 tpd currently) from around mid-2013.
Analyst Hunter Hillcoat said he found the firm's activities were "well managed" with an "attractive production growth profile" and a "sensible approach".
In 2001, the firm acquired 13,000 acres of five contiguous formerly producing gold mines in the southern Abitibi belt. 
"KGI has over 4 million ounces of gold inventory in a region that has historically produced 22 mln ounces," pointed out the analyst.
He noted the firm was using appropriate mining methods rather than forcing mechanisation, and in some areas, using innovative techniques, such as battery driven shovels.

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