Gold miner Kirkland Lake Gold is consolidating its footprint in Australia with a $C56 million ($56.6 million) investment in another Canadian company, Novo Resources.
Kirkland, owner of the high-grade Fosterville underground gold mine in Victoria, plans to buy 14 million Novo shares at $C4 each – an investment that would lift its interest in the smaller company to 18.2 per cent.
Novo plans to use the funds to develop and explore its gold projects, which include several properties in northern Western Australia, and for general working capital.
Kirkland president and chief executive Tony Makuch said the Novo investment was an important part of the company’s strategy to grow and enhance the value of its Australian franchise.
“Investing in Novo will provide our company with exposure to highly prospective exploration targets in the Pilbara region of Western Australia, including the Karratha gold project, where recent exploration results have been very encouraging and suggest that the property may be host to a large gold system with significant potential for profitable, long-life production,” Makuch said.
“The investment we are making will support an acceleration of exploration programs at Karratha and other key projects within Novo’s portfolio.”
Toronto-based Kirkland also owns assets in the Northern Territory, in addition to the Fosterville mine – Victoria’s largest gold operation.
Kirkland expects to produce up to 260,000 ounces of gold at Fosterville in 2017. The mine is around 20km from Bendigo.
Novo chairman and president Qinton Hennigh welcomed Kirkland Lake as a strategic investor.
“Kirkland Lake Gold is quickly rising as a preeminent high-margin gold producer, the sort of company we see as a good fit for Novo’s shareholder registry,” Hennigh said.
“Given the Karratha gold project is still early stage and the Beatons Creek gold project is ramping up to development, this sizeable commitment from KLG serves as a strong endorsement of Novo’s potential.”
Vancouver-based Novo will have around $70 million in funding following the placement, Hennigh added.