Kinross Gold announced on Dec. 8 that it will acquire all of the issued and outstanding shares of Vancouver-based Great Bear Resources and its flagship Dixie project in Red Lake district of Ontario.

Kinross will acquire Great Bear for approximately $1.8 billion, or $29.00 per share. The agreement also includes contingent consideration payment of $58.2 million to be paid when commercial production begins at Dixie, provided that at least 8.5 million gold ounces of measured and indicated mineral resources are reported prior to production.

“The Dixie project represents an exciting opportunity to develop a potentially top-tier deposit into a large, long-life mine complex,” said Kinross president and CEO J. Paul Rollinson. “In addition to the prospect of developing a quality, high-grade open-pit mine, we also believe that a significant portion of the asset’s value is its longer-term potential, which includes the view of a sizeable underground operation”

The Dixie project has a lot of exploration potential, as according to Great Bear, approximately 80 per cent of the property is unexplored. To date, Great Bear has identified five high-grade gold discoveries. One of the most significant discoveries at Dixie is the large-scale “LP Fault” zone. According to Kinross, it has similar geological features to the Hemlo deposit which has produced more than 20 million ounces of gold over the span of more than 30 years. Great Bear has yet to release an initial mineral resource estimate for the project, but expects to do so in early 2022.

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Kinross plans to advance exploration at the LP Fault zone with 200,000 metres of drilling in 2022. The company will also expects to explore the other satellite deposits on the property, including the Limb, Hinge and Midwest zones.

“Kinross has the strong technical expertise and experience to successfully advance the project from exploration to development and unlock considerable value for our shareholders,” Rollinson said, continuing by saying that the company’s due diligence was sufficient to confirm that Dixie will become a high-quality asset.

“Great Bear shareholders will now be in a unique position to benefit from the potential of the top-tier Dixie project under one company and will maintain strong exposure to the project through their Kinross shares,” said Great Bear president and CEO Chris Taylor. “Dixie will be a significant asset for Kinross and the company’s strong track record, coupled with its projected production growth profile over the coming years, offers our shareholders an attractive investment in its own right.”

Kinross is expected to finance the acquisition with its existing liquidity: US$586.1 million in cash and a US$1.5 billion revolving credit facility.