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Wednesday, 7 November 2012
Kirkland Lake Gold closes $69 mln private placement of convertible debentures
Kirkland Lake Gold (TSE:KGI)(AIM:KGI) says it has closed the private placement financing of convertible debentures announced last month, raising a total of $69 million.
The company said the total proceeds of $69 million includes an exercised option for an additional 15 per cent of the offering.
In October, Kirkland agreed with Dundee Securities and CIBC, the co-underwriters, to sell, on a bought deal basis, 60,000 convertible unsecured subordinated debentures at a price of $1,000 each.
The company said the debentures will mature on December 31, 2017 and will bear interest, payable semi-annually, at a rate of 7.5 per cent.
They can be converted into common shares at any time before the maturity date, at a price of $13.7 per common share. This equates to a ratio of 72.9927 common shares per $1,000 principal amount of debentures.
Kirkland plans to use the proceeds for the production expansion program at its mining operations in Kirkland Lake, Ontario, as well as to complete remaining payments due to Queenston Mining related to the acquisition of various joint ventures projects.
Funds will also be used for general corporate purposes, including working capital.
The miner said the debentures will rank subordinate to payment of prinicipal and interest on all current and future senior obligations, and will rank "pari-passu" to all present and future unsecured debt.
Earlier this week, capital markets firm Ocean Equities said Kirkland Lake Gold's latest drill results from the South Mine Complex at the gold producer's landmark Macassa mining complex in Ontario were "standout".
Ocean noted that the results show that the high grade mineralization at the South Mine Complex extends to the east, with the drilling including an intersection of 100 grams per tonne (g/t) gold over 3 metres.
The drilling targeted an area of mineralization that extended onto its HM claim - one of the several claims of which Kirkland acquired full control when purchasing Queenston Mining's (TSE:QMI) 50 per cent stake in August.
The next big news to watch out for, Ocean prepared, is the ramp-up of production at Kirkland's Macassa, as the expansion phases near completion - a "game-changing" event for the Ontario miner.
Indeed, Kirkland Lake Gold's goal is to create a long lived intermediate gold mining company based in the historic Kirkland Lake Gold camp. The company plans to do this by increasing production to 250,000 to 300,000 ounces per year in several stages, and by decreasing production costs.