Kinross Gold to Acquire Great Bear Mining Its Dixie Gold Project in Red Lake

Kinross Gold to Acquire Great Bear Mining Its Dixie Gold Project in Red Lake

The market may need time to account for Kinross Gold’s acquisition given Dixie’s early, preresource stage despite the asset’s seemingly large size potential, a Stifel GMP report noted.

Kinross Gold Corp. (K:TSX; KGC:NYSE), which has publicly stated it wanted to own a Canadian asset, agreed to acquire Great Bear Resources Ltd. (GBR:TSX.V; GTBDF:OTCQX) and its Dixie gold project in Ontario’s Red Lake Mining District for about CA$1.8 billion (CA$1.8B), or US$1.4B, Stifel GMP analyst Ingrid Rico reported in a Dec. 9 research note.

“Stifel GMP has a positive view on the Dixie project, but we believe that the market will need time to understand the value of this project,” Rico added.

The analyst presented the terms of the deal. Kinross agreed to pay CA$29 per share for Great Bear, which is at a 31% premium to Dec. 8’s closing price and a 40% premium to the 20-day volume-weighted average price.

The contingent value rights consideration is equal to 0.1330 of one Kinross share per one Great Bear common share. This is to be paid when both commercial production starts at Dixie and the estimated Measured and Indicated resource there is at least 8,500,000 million ounces (8.5 Moz).

Great Bear shareholders may choose to receive cash or Kinross shares, however, both have a cap. The aggregate cash maximum is CA$1.4B and the issued shares maximum is 95.8 million.

Per Stifel GMP’s calculations, assuming a 12,000,000 ounce (12 Moz) resource at Dixie, Kinross will pay about US$113 per ounce on an enterprise value per ounce basis (excluding the contingent payment). Assuming a smaller resource, of 8.5 Moz, Kinross will pay US$160 per ounce.

Rico described the current status of the Dixie project. There, Great Bear discovered five high-grade gold discoveries, including the LP Fault zone, after drilling 794 holes over 340,000 meters.

“The LP Fault zone at the Dixie project has been depicted as analogous to the Hemlo mine, which has a multidecade history of production and more than 20 Moz of production,” noted Rico.

An initial resource estimate for Dixie has not yet been done. Great Bear was working to release one on the LP Fault zone in Q1/22.

Given Dixie’s early stage, Rico purported the market may have “a mixed view on this transition as it seemingly looks like a big price for a preresource junior company. The market might believe that it can’t confidently wrap its arms around valuation and future production potential.” It could be several years before production starts, she added.

To help resolve this potential hangover on the stock, Kinross has an aggressive work plan in place for Dixie. The miner intends to drill 200,000 meters in the LP Fault zone; determine the extent of mineralization in this zone at depth and laterally beyond the central area; and explore for additional Red Lake-type deposits, including definition drilling of the high-grade Limb, Hing and Midwest targets.

Stifel GMP has a Buy rating and a CA$14 per share price target on Kinross, currently trading at around CA$6.74 per share.

[NLINSERT]

Disclosures:
1) Doresa Banning compiled this article for Streetwise Reports LLC and provides services to Streetwise Reports as an independent contractor. She or members of her household own securities of the following companies mentioned in the article: None. She or members of her household are paid by the following companies mentioned in this article: None.
2) The following companies mentioned in this article are billboard sponsors of Streetwise Reports: None. 
3) Comments and opinions expressed are those of the specific experts and not of Streetwise Reports or its officers. The information provided above is for informational purposes only and is not a recommendation to buy or sell any security.
4) The article does not constitute investment advice. Each reader is encouraged to consult with his or her individual financial professional and any action a reader takes as a result of information presented here is his or her own responsibility. By opening this page, each reader accepts and agrees to Streetwise Reports’ terms of use and full legal disclaimer. This article is not a solicitation for investment. Streetwise Reports does not render general or specific investment advice and the information on Streetwise Reports should not be considered a recommendation to buy or sell any security. Streetwise Reports does not endorse or recommend the business, products, services or securities of any company mentioned on Streetwise Reports.
5) From time to time, Streetwise Reports LLC and its directors, officers, employees or members of their families, as well as persons interviewed for articles and interviews on the site, may have a long or short position in securities mentioned. Directors, officers, employees or members of their immediate families are prohibited from making purchases and/or sales of those securities in the open market or otherwise from the time of the decision to publish an article until three business days after the publication of the article. The foregoing prohibition does not apply to articles that in substance only restate previously published company releases.  

Important Disclaimers for Stifel Canada, Kinross Gold Corp., Dec. 9, 2021

I, Ingrid Rico, certify that the views expressed in this research report accurately reflect my personal views about the subject securities or issuers; and I, Ingrid Rico, certify that no part of my compensation was, is, or will be directly or indirectly related to the specific recommendations or views contained in this research report. Our European Policy for Managing Research Conflicts of Interest is available at www.stifel.com/institutional/ImportandDisclosures.
Kinross Gold is provided with non-investment banking securities related services by Stifel Canada or an affiliate or was provided with non- investment banking securities related services by Stifel Canada or an affiliate within the past 12 months.
Stifel Canada or an affiliate expects to receive or intends to seek compensation for investment banking services from Kinross Gold in the next 3 months.
The equity research analyst(s) responsible for the preparation of this report receive(s) compensation based on various factors, including Stifel’s overall revenue, which includes investment banking revenue.
Additional Disclosures: Please visit the Research Page at www.stifel.com for the current research disclosures and respective target price methodology applicable to the companies mentioned in this publication that are within Stifel Canada’s coverage universe. For a discussion of risks to target price including basis of valuation or methodology, please see our stand-alone company reports and notes for all stocks.
The information contained herein has been prepared from sources believed to be reliable but is not guaranteed by us and is not a complete summary or statement of all available data, nor is it considered an offer to buy or sell any securities referred to herein. Opinions expressed are as of the date of this publication and are subject to change without notice. These opinions do not constitute a personal recommendation and do not take into account the particular investment objectives, financial situation or needs of individual investors. Employees of Stifel, or its affiliates may, at times, release written or oral commentary, technical analysis or trading strategies that differ from the opinions expressed within. Stifel or any of its affiliates may have positions in the securities mentioned and may make purchases or sales of such securities from time to time in the open market or otherwise and may sell to or buy from customers such securities on a principal basis; such transactions may be contrary to recommendations in this report. Past performance should not and cannot be viewed as an indicator of future performance. Unless otherwise noted, the financial instruments mentioned in this report are priced as of market close on the previous trading day and presumed performance is calculated always over the next 12 months.
As a multi-disciplined financial services firm, Stifel regularly seeks investment banking assignments and compensation from issuers for services including, but not limited to, acting as an underwriter in an offering or financial advisor in a merger or acquisition, or serving as a placement agent in private
Affiliate Disclosures: This report has been prepared by Stifel Nicolaus Canada Incorporated. (“Stifel Canada”), which is authorized and regulated by the Investment Industry Regulatory Organization of Canada (“IIROC”), and also trades under the names “Stifel GMP” and/or “Stifel FirstEnergy”. All relevant disclosures required by regulatory rules (including IIROC)and Stifel Canada’s recommendation statistics and research dissemination policies can be obtained at www.Stifel.com/Research or by calling Stifel Canada’s Compliance Department. Stifel Canada will provide, upon request, a statement of its financial condition and a list of the names of its Directors and senior officers.
References to “Stifel” (collectively ”Stifel”) refer to SFC and other associated affiliated subsidiaries including (i) Stifel, Nicolaus & Company, Incorporated (“SNC”); (ii) Keefe, Bruyette & Woods, Incorporated (“KBWI’’), which are both U.S. broker-dealers registered with the United States Securities and Exchange Commission (“SEC”) and members of the Financial Industry National Regulatory Authority (“FINRA”), respectively; (iii) Stifel Nicolaus Canada, Incorporated. (“Stifel Canada”), which is authorised and regulated by Investment Industry Regulatory Organization of Canada (“IIROC”), and also trades under the names “Stifel GMP” and/or “Stifel FirstEnergy”; (iv) Stifel Nicolaus Europe Limited (“SNEL”), which is authorised and regulated by the Financial Conduct Authority (“FCA”) (FRN 190412) and is a member of the London Stock Exchange and also trades under the name Keefe, Bruyette & Woods Europe (“KBW Europe”); and (v) Stifel Europe Bank AG (“SEBA”), which is regulated by the German Federal Financial Supervisory Authority (Bundesanstalt für Finanzdienstleistungsaufsicht; “BaFin”) and is a member of Deutsche Boerse and SIX Swiss Exchange and (vi) Stifel Schweiz AG (“STSA”), which is representative of SEBA in Switzerland and regulated by the Eidgenössische Finanzmarktaufsicht (“FINMA”). SNEL, SEBA and STSA are collectively referred to as Stifel Europe.
Registration of non-US Analysts: Any non-US research analyst employed by Stifel contributing to this report is not registered/qualified as a research analyst with FINRA and is not an associated person of the US broker-dealer and therefore may not be subject to FINRA Rule 2241 restrictions on communications with a subject company, public appearances, and trading securities held by a research analyst account.
Global Research Notes: Stifel Global Research (Cross-Border Research) notes are intended for use only by Institutional or Professional Clients. Research analysts contributing content to these reports are subject to different regulatory requirements based on the jurisdiction in which they operate. Clients seeking additional information should contact the Stifel entity through which they conduct business.
SEBA & STSA Sponsored Research: At SEBA & STSA, analysts may produce issuer paid research (‘sponsored research’). This research is produced by analysts in accordance with local regulatory requirements relating to such research. In certain jurisdictions, this issuer paid research may be deemed to be independent research albeit not produced to the same conflicts of interest standards required by all jurisdictions for independent research. Where research has been paid for by an issuer, this will be clearly labelled. Please see our European Policy for Managing Research Conflicts of Interest for additional information.
In jurisdictions where Stifel is not already licensed or registered to trade securities, transactions will only be affected in accordance with local securities legislation which will vary from jurisdiction to jurisdiction and may require that a transaction is carried out in accordance with applicable exemptions from registration and licensing requirements. Non-US customers wishing to effect transactions should contact a representative of the Stifel entity in their regional jurisdiction except where governing law permits otherwise. US customers wishing to effect transactions should contact their US salesperson.
The securities discussed in this report may not be available for sale in all jurisdictions and may have adverse tax implications for investors. Clients are advised to speak with their legal or tax advisor prior to making an investment decision.
The recommendation contained in this report was produced at 9 December 2021 08:53EST and disseminated at 9 December 2021 08:53EST.


Kinross Gold to Acquire Great Bear Mining Its Dixie Gold Project in Red Lake News

Source link

Kinross Gold to Acquire Great Bear Mining Its Dixie Gold Project in Red Lake Resources

Gold

Comments are closed, but trackbacks and pingbacks are open.