Kinross to acquire Aurelian Resources in $1.2B friendly deal
Shares of Aurelian Resources Inc. jumped Thursday after the company announced a friendly takeover offer from Kinross Gold Corp.
Aurelian shares ended the trading day at $6.31, up $1.86. The stock had hit an intraday high of $7.50.
Earlier, the companies unveiled the all-stock deal valued at about $1.2 billion. Based on recent trading prices, the offer values Aurelian at $8.20 a share.
Each Aurelian share will be swapped for 0.317 of a Kinross common share, plus 0.1429 of a five-year warrant entitling the holder to acquire one Kinross common share at $32.
Kinross said it expects to issue approximately 47 million common shares under the deal, representing approximately eight per cent of Kinross's current outstanding common shares.
Kinross shares finished the day at $18.70, off $2.14.
Aurelian's main property is the Fruta del Norte discovery in south-eastern Ecuador. The company said in October 2007 that the property held an estimated 13.7 million ounces of contained gold and 22.4 million ounces of contained silver.
However, the situation for mining companies in Ecuador is unclear. Earlier this year, the country's government imposed a six-month moratorium on mineral exploration while it developed new mining rules.
The move prompted a sharp drop at the time in the share prices of companies involved in mining there, although they did recover some ground after the president of the South American nation tried to reassure investors that "responsible" mining would be permitted to go ahead.