(Reuters) - Kirkland Lake Gold Inc KGI.TO agreed on Monday to purchase fellow Canadian gold miner St Andrew Goldfields Ltd SAS.TO in an all-share deal valued at around C$178 million ($133.54 million) to create a mid-sized, Ontario-focused gold producer.
The transaction will create a company with four mines and two mills in Ontario’s Abitibi mining region.
The combined company expects to produce between 260,000 and 310,000 ounces of gold in 2016 at cash costs of between $600 and $690 an ounce.
The deal share exchange ratio values each St Andrew share at 47 Canadian cents, a 24 percent premium on the company’s closing stock price on Monday of 38 Canadian cents.
The transaction comes as gold miners have been under pressure for more than four years, and mergers and acquisitions subdued, due to a 40 percent drop in the bullion price.
Reporting by Nicole Mordant in Vancouver; Editing by Cynthia Osterman