VANCOUVER (miningweekly.com) – Shareholders of Canadian gold producers Kirkland Lake Gold and Newmarket Gold have approved the plan of arrangement to merge the two companies.

The contentious all-scrip deal will create a new low-cost miner called Kirkland Lake Gold with a projected market capitalisation of about C$2.4-billion (when first announced on September 29) and yearly output of more than 500 000 oz of gold, spread across seven mines and five mills in Ontario and Australia.

The companies said in a joint statement on Friday that 82.64% of Kirkland Lake votes cast approved the transaction at a meeting held earlier in the day, and 99.79% of Newmarket shares cast were in favour of the deal.

Market observers noted that the deal lacked synergies when compared with potential other suitors such as South Africa’s Gold Fields and fellow Canadian miner Silver Standard, which had submitted three unsolicited and sweetened joint offers totalling C$1.4-billion for Kirkland Lake. The two suitors formally withdrew their bids on November 18.

Under the agreement, Newmarket shareholders will receive 0.475 shares of the combined Kirkland company for each existing share of Newmarket. Kirkland Lake shareholders’ stock will be exchanged at a ratio of 2.1053 Newmarket shares per Kirkland share. Kirkland will emerge from the transaction with 57% ownership of the combined company, and Kirkland’s CEO Tony Makuch will head the combined company.

The merger with Kirkland comes a little over a year after Newmarket completed a transformational merger of its own, pushing production up to about 200 000 oz/y. Kirkland also comes into the deal after completing its own set of acquisitions, including Ontario-based St Andrew Goldfields last November.

An interesting link between the two companies is Kirkland Lake chairperson Eric Sprott, who owns 13.5% of Newmarket’s stock and 6.7% of Kirkland’s outstanding stock.

The deal is expected to close by November 30, subject to customary approvals.

Kirkland Lake’s TSX-listed stock on Friday fell as much as 4.1% to C$7 apiece and that of Newmarket was down 3.2% at C$3.32 a share after the news release.