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UPDATE 1-Gold miner Kirkland Lake shares rise on bid speculation

Published 2016-11-14, 02:23 p/m
© Reuters.  UPDATE 1-Gold miner Kirkland Lake shares rise on bid speculation
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(Recasts; adds share price move, analyst comment, Kirkland Lake statement)

VANCOUVER, Nov 14 (Reuters) - Shares in Kirkland Lake Gold KLG.TO surged as much as 9 percent on Monday on speculation there might be another bid for the Canadian gold miner or that its planned takeover of Newmarket Gold Inc NMI.TO , which had put its stock under pressure, will be voted down.

Reuters reported on Friday that South Africa's Gold Fields Ltd GFIJ.J and Canada's Silver Standard Resources Inc SSO.TO have made three joint bids for Kirkland Lake and recently sweetened their offer to about C$1.4 billion ($1 billion). Kirkland Lake and Gold Fields later confirmed the report.

Kirkland has rejected all three bids, saying they are "not financially superior" to its own plan to acquire Newmarket, a small Australia-focused miner, for about C$1 billion in stock. are hoping that there is another bid or that somebody else votes against the merger," said John Tumazos, owner and chief executive of John Tumazos Very Independent Research.

"Now that the C$1.4 billion price is in the market, some other company can look at that and say, we'll bid C$100 million more," he said.

It is possible new bidders may enter the fray, sources told Reuters last week, noting companies such as Yamana Gold Inc YRI.TO and Hecla Mining Co HL.N have assets in the area where Kirkland Lake operates.

Shares in Kirkland Lake, a mid-sized producer operating four gold mines and two mills in a bullion-rich belt of northeastern Ontario, were last at C$8.54, up 6 percent. Earlier they touched a high of C$8.83.

Shares in Newmarket were 3 percent higher at C$3.46.

Kirkland Lake said in a statement on Monday that the majority of shareholders it had "spoken with" believed its planned acquisition of Newmarket "represents a clear and compelling opportunity to create sustained, long-term value."

Kirkland Lake and Newmarket shareholders are due to vote on their combination on Nov. 25. Kirkland Lake needs at least two-thirds of its shareholders to approve the deal for it to succeed. At least half of Newmarket's shareholders need to back the transaction.

Investor advisory firms ISS and Glass Lewis have recommended to shareholders of Kirkland Lake and Newmarket that they vote for the deal.

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