Kinross Gold plans to buy Underworld Resources for $136 million
12 Mar 2010
North America's third-largest gold miner in reserves, Kinross Gold Corporation (Kinross) has entered into an agreement yesterday with smaller exploration company Underworld Resources Inc (Underworld) to acquire the 100 per cent of the outstanding common shares of the latter for approximately C$139 million ($136 million), in a move to further expand its asset base.
Kinross already holds 8.5 per cent stake in Underworld. A definitive agreement on the transaction is expected to be finalised by 15 March 2010.
Under the terms, Kinross will offer 0.141 of a common share, plus C$0.01 in cash for each Underworld share, signifying around C$2.62 per share, based on the closing price of C$18.54 per Kinross share Wednesday on Toronto Stock Exchange.
The offer represents a premium of 36 per cent to Wednesday's closing price of C$1.93 for the Underworld share in Toronto. Further to the news of a possible takeover, shares in Underworld shot up 33 per cent to end at C$2.57 yesterday.
Kinross will issue approximately 6.8 million common shares, representing about 1-per cent of Kinross' current outstanding shares.
Vancouver-based Underworld is an exploration-stage company, engaged principally in the acquisition, exploration and development of resource properties.
