Synergy sprouts in fertile gold fields: Kirkland Lake Gold ties the knot with St. Andrew Goldfields.

• Author: Franczyk, Walter
• Position: TEMISKAMING & REGION

Kirkland Lake's Mile of Gold is about to get longer--about 120 kilometres longer.

That's the strike length of the new land ; package acquired by Kirkland Lake Gold j Inc., owner of four past-producing mines and the operating Macassa Mine, all on the Mile of Gold, a rich stretch of geology where seven mines have produced more than 25 million ounces of gold.

In a friendly takeover, Kirkland Lake Gold acquired St. Andrew Goldfields Ltd. with its three gold mines, a mill and extensive land holdings straddling the Porcupine-Destor Fault, about 70 kilometres north of Kirkland Lake. That massive northern land package may hold untapped riches for the newly amalgamated company.

St. Andrew, which hired 60 additional people to bring its new Taylor gold mine near Matheson into commercial production in late 2015, had not invested a lot of money in a regional brownfield or greenfield exploration program on its properties, said George Ogilvie, president and CEO of Kirkland Lake Gold.

"I think with a stronger consolidated company generating some significant free cash over time, we're going to be able to start identifying exploration targets within the current St. Andrew land package that we're going to be able to start exploring." Exploration has been breathing new life into the Macassa Mine, where the discovery of a new high-grade gold zone, known as the South Mine Complex, is expected to add millions more ounces to reserves.

The larger land position acquired by Kirkland Lake Gold is but one facet of the $178-million, all-share acquisition to benefit both mining operations.

Combining production from its Taylor Mine with 90,000 to 95,000 ounces of gold from its Holt and Holloway mines, St. Andrew pegged 2015 gold production at 100,000 to 110,000 ounces. In 2016, its gold output could reach 140,000 ounces. Merged with Kirkland Lake Gold with its annual production of more than 150,000 ounces, the new company could pour between 260,000 and 310,000 ounces annually from four mines and two mills at a cash cost of between US$600-690 an ounce. Proven and probable reserves would climb by more than 50 per cent to 2.3 million ounces.

For years, the investment community and some shareholders have been calling for companies with single, producing mines in the Northern Abitibi Greenstone Belt to consolidate, Ogilvie said. "We're generally being applauded for making the first move."

The takeover offered St. Andrew shareholders one Kirkland Lake Gold share for every 11...