Kinross Gold, Red Back Mining to merge

Last Updated: Monday, August 2, 2010 | 7:50 PM ET Comments0Recommend4

The Canadian Press

Kinross Gold Corp. said Monday it will acquire all of the outstanding common shares of Red Back Mining Inc. that it doesn't already own in an all-stock deal valued at $7.1 billion US.

Toronto-based Kinross said the friendly merger with the African-focused gold producer will create a pure gold senior producer with an exceptional growth profile.

Shareholders of Vancouver-based Red Back will receive 1.778 Kinross common shares, plus 0.110 of a Kinross common share purchase warrant, for each Red Back common share held.

After the deal is complete, Kinross expects to issue approximately 425 million Kinross common shares and approximately 26 million Kinross common share purchase warrants.

The current Kinross shareholders will then hold approximately 63 per cent of the combined company, while current shareholders of Red Back will hold approximately 37 per cent.

Analysts estimate the combined company's gold production would be approximately 3.9 million ounces in 2015.

Kinross shares were down 64 cents to $15.70 US on Monday in after-market trading in New York.

Red Back's stock didn't trade Monday because of the holiday in Toronto. They closed last week at $26.02.