Kirkland Lake ($39) is down big time following the announcement of the merger with Detour Gold.
The market has this totally wrong. Tony Makuch has a history of remarkably prescient, disciplined decisions. In one stroke Tony has dramatically increased the production and reserve profile of Kirkland Lake, ensuring the long-term viability of the business and access to gold supply.
He is using the relatively cheaper Kirkland Lake currency and given his track record, I would be confident that this acquisition is far better than a fair price for this asset, even at today’s gold levels. I expect that Tony will be able to rationalize the Detour production, lowering the cost profile and now has a huge new pool of reserves to develop.
So, given his history, while I am certain that the deal works at today’s gold pricing, it becomes a huge profit machine with higher gold levels, something that many of us invested in the sector expect.
I am providing a link to the best article that I have read on this acquisition. Notably, Eric Sprott, the legendary gold investor is on board and I am happy to ride in his chariot along with our CEO, Mr. Makuch.