Ambitious Kinross buys Falconbridge Gold

Toronto-based Kinross Gold (TSE) is on its way to becoming a new player on the Canadian gold mining scene.

Just last month the company purchased two U.S. gold mines for US$16.8 million (see separate story on page 14 for details).

And now Kinross is in the midst of snapping up Falconbridge’s 56.4% interest in Falconbridge Gold (TSE). The purchase price is $22 million. (A previous purchase offer by mining financier Dennis McLeod was withdrawn in July of last year. The nickel miner had been entertaining bids for the junior gold for nearly two years.)

Kinross President Robert Buchan told The Northern Miner that his goal is to develop a strong reserve and production base. By the end of 1994, he expects Kinross to be producing 200,000 oz. per annum gold (and gold equivalent). “We want to create a company with substantial production and keep the balance sheet in good shape,” he said.

Spun off by Falconbridge Ltd. in 1988, Falconbridge Gold produced over 90,000 oz. gold at a cash cost of US$255 per ounce in 1992. Production came from the Hoyle Pond and Bell Creek mines near Timmins, Ont. and the Blanket and Golden Kopje mines in Zimbabwe.

The two U.S. mines Kinross recently acquired would account for another approximately 100,000 oz. of gold and gold equivalent (silver). At the end of 1992, Falconbridge’s Hoyle Pond proven and probable reserves were 184,460 tonnes averaging 14.6 grams gold per tonne; the Blanket mine, 1,034,650 tonnes grading 4.26 grams; and the Golden Kopje, 326,650 grading 4.88 grams.

Should Kinross successfully acquire Falconbridge’s 8,244,655 common shares of Falconbridge Gold and its $7.4 million convertible debenture for $22 million, it will then attempt to merge the two companies Buchan says. The deal with Falconbridge, expected to close by the end of September, is subject to a due diligence review by Kinross and board approval by both companies.