US$3.1 billion transaction aligns with Kinross' four point
strategy, expands reserve base and creates shareholder value
TORONTO and VANCOUVER, Nov. 6 /PRNewswire-FirstCall/ -- Kinross
Gold Corporation ("Kinross") (TSX: K, NYSE: KGC) and Bema Gold
Corporation ("Bema") (TSX/NYSE: BGO, AIM: BAU) are pleased to
announce that their Boards of Directors have unanimously approved
Kinross' acquisition of Bema in a US$3.1 billion transaction to
create a US$7.9 billion major gold producer. Highlights Bema
shareholders will vote at a meeting, expected to be held in
mid-January 2007, to approve the acquisition. Upon successful
completion of the transaction, on a pro forma basis Kinross will
have the following attributes: - Mineral reserves and resources of
50 million ounces of gold; 80 million ounces of silver and 2.9
billion pounds of copper - Nine mines, in five countries, on three
continents, with 4,700 employees globally - Excellent pipeline of
major construction and future projects including Paracatu in
Brazil, Kupol in Russia and Cerro Casale in Chile - Participation
in exploration joint venture to drive new Russian growth
opportunities - 2006 estimated production of 1.8 million gold
equivalent ounces; growing 56 per cent to approximately 2.8 million
ounces in 2009 - Estimated 2009 cost of sales per gold equivalent
ounce at Kupol of approximately US$130 will lower an already
competitive cost profile - Consolidated ownership of Refugio mine
in Chile - Cash of approximately US$350 million - Immediate
synergies - Led by Kinross management team "This acquisition will
create exceptional value for shareholders," said Tye W. Burt,
President and Chief Executive Officer of Kinross. "By combining our
assets, operations and expertise, we have dramatically increased
our gold reserve and resource base to more than 50 million ounces.
We will have a well-balanced gold reserve profile with 39 per cent
in Chile, 37 per cent in Brazil, 16 per cent in North America and 8
per cent in Russia. These reserves, coupled with our enhanced
exploration pipeline, will put Kinross in a unique position to take
advantage of the robust gold price and provide investors with an
excellent portfolio of world-class assets." "The Bema Board of
Directors unanimously approved this transaction and an independent
advisor has provided an opinion that the transaction consideration
to be received by Bema shareholders is fair from a financial point
of view. We believe that our companies are a great fit due to
complementary strengths, geographic synergies and similar growth
profiles," said Clive T. Johnson, Chairman, President and Chief
Executive Officer of Bema. "Bema shareholders are getting an
attractive premium to become part of a stronger company that will
create near- and long-term value for all shareholders. Further, we
expect that the combined Company will be re-rated in the market
once the transaction is complete." This acquisition of Bema
consolidates Kinross' ownership of Refugio and increases its
reserves in Chile and Russia. District exploration and operating
synergies will be realized by substantially increasing Kinross'
position in the Maricunga region in Chile and adding the Chukotka
region in Russia. "The addition of Russian operations and
exploration opportunities through the acquisition is a natural fit
with our proven track record and expertise mining in the country,"
said Burt. "Bema's Kupol project will be a cornerstone growth asset
that is expected to begin production in 2008. Kupol is fully
financed and will continue to be staffed by Bema's Russian
management and construction development team." "This acquisition
aligns perfectly with our strategic plan by increasing our core
asset base, adding exploration reach and increasing our growth from
2006 through 2009," said Burt. "This acquisition creates an even
stronger Canadian-based gold company that fortifies Canada's
dominant position in the global gold mining arena." With a
successful track record, Clive Johnson will lead a new company
focused on exploration and development ("NewCo"). Kinross will
participate as an equity investor and have a right of joint venture
opportunities in Russia. Summary of the Transaction The acquisition
will be completed by way of a shareholder-approved plan of
arrangement whereby each Bema common share will be exchanged for
0.441 of a Kinross common share representing a 34 per cent premium
to the 20-day volume weighted average price of Bema common shares
on the TSX. Upon completion of this transaction, 61 per cent of
Kinross will be held by existing Kinross shareholders and 39 per
cent by existing Bema shareholders. Following completion of the
transaction, all outstanding options and warrants of Bema will be
exercisable to acquire that number of common shares of Kinross
determined by reference to the share exchange ratio. Other terms of
the transaction include an agreement by Bema to pay a break fee to
Kinross under certain circumstances in the amount of C$79 million.
Bema has also provided Kinross with certain other customary rights,
including a right to match competing offers. The acquisition of
Bema is subject to the parties completing due diligence and
entering into a further definitive agreement providing for the
specific mechanics for completing the transaction. The Board of
Directors of Bema has unanimously recommended the transaction to
shareholders and will sign support agreements in favour of the
transaction. The Board of Directors has also received an opinion
from financial advisors to the effect that the consideration to be
received by Bema shareholders is fair from a financial point of
view. The acquisition is subject to all requisite regulatory
approvals, third party consents and other conditions customary in
transactions of this nature. The acquisition is expected to require
the approval of (i) at least two-thirds of the votes cast by Bema
shareholders present in person or by proxy at a meeting expected to
be held in January 2007; and (ii) a majority of the votes cast by
Bema shareholders present in person or by proxy at such meeting,
excluding votes cast by those Bema shareholders required to be
excluded pursuant to the minority approval provisions of Ontario
Securities Commission rule 61-501 and Regulation Q-27 of the
Autorite des marches financiers. A proxy circular, setting out
details of the transaction and voting procedures, is expected to be
mailed to Bema shareholders in December 2006. In connection with
the transaction, NewCo will purchase certain Bema assets for
aggregate consideration of US$20 million, including: - An
exploration alliance in Chukotka aimed at developing future gold
opportunities - An exploration joint venture in northern Colombia
with AngloGold Ashanti Limited - All of the shares of Petrex
(Proprietary) Ltd. Kinross will have a right to maintain a 9.9 per
cent equity interest in NewCo and an option to acquire up to 19.9
per cent of NewCo in any initial public offering. Board of
Directors Kinross will select one Bema nominee to be included in
Kinross' management slate of directors to be nominated for election
at Kinross' next annual shareholders' meeting. Until such time, the
Bema nominee shall sit as an observer on the Kinross board.
Advisors and Counsel Kinross' Financial Advisor is Scotia Capital
Inc. Strategic Advisors include Rothschild Inc., GMP Securities LP
and UBS Canada Securities Inc. and its legal counsel are Blake,
Cassels & Graydon LLP and Chadbourne & Parke LLP with
regard to Russian law matters. Bema's Financial Advisor is Genuity
Capital Markets and its legal counsel is Stikeman Elliott LLP. A
special committee of Bema's Board of Directors is receiving
financial advice from BMO Capital Markets and its legal counsel is
Bennett Jones LLP. Kinross Today Kinross, a Canadian-based gold
mining company, is the fourth largest primary gold producer in
North America and the eighth largest in the world. With eight mines
in Canada, the United States, Brazil and Chile, Kinross employs
more than 3,700 people. Kinross maintains a strong balance sheet
and a no gold hedging policy. Kinross is focused on the strategic
objective maximizing net asset value and cash flow per share
through a four-point plan built on growth from core operations;
expanding capacity for the future; attracting and retaining the
best people in the industry; and driving new opportunities through
exploration and acquisition. Kinross maintains listings on the
Toronto Stock Exchange (symbol: K) and the New York Stock Exchange
(symbol: KGC). Bema Today Bema Gold Corporation is one of the
world's fastest growing intermediate gold producers with operating
mines and development projects on three continents. Bema is
projected to produce one million ounces of gold annually by the
year 2009. Bema is listed on the Toronto Stock Exchange and the New
York Stock Exchange (symbol: BGO) and on the AIM Exchange in London
(symbol: BAU). Conference Call Kinross and Bema will hold a joint
conference call with simultaneous web cast presentation at 11 a.m.
EST on November 6, 2006 to discuss this transaction. Conference
call details: To access the conference call, dial: In Toronto:
416-644-3420 In Vancouver: 604-677-8677 In North America (toll
free): 1-866-250-4892 The presentation slide show will be available
in PDF format for download from the Kinross website at
http://www.kinross.com/ in advance of the conference call. A replay
will be available after 2 p.m. until November 20, 2006. The replay
number is 416-640-1917 and the North American toll free number is
1-877-289-8525. To access the recording, please enter access code
21209025 followed by the number sign. Bema's Third Quarter
conference call and webcast has been rescheduled to Tuesday
November 14, 2006 at 2 p.m. PST. To access the call, please dial
1-416-695-5261 or toll free 1-877-888-3490. A playback will be
available for one week after the call by dialing 1-416-695-5275 or
toll free 1-888-509-0081, pass code: 632675. For more information,
visit Bema's website at http://www.bema.com/. Cautionary Statements
All statements, other than statements of historical fact, contained
or incorporated by reference in this media release, including any
information as to the future financial or operating performance of
Kinross and Bema, constitute "forward-looking statements" within
the meaning of certain securities laws, including the "safe
harbour" provisions of the Securities Act (Ontario) and the United
States Private Securities Litigation Reform Act of 1995 and are
based on expectations, estimates and projections as of the date of
this media release. Forward-looking statements include, without
limitation, statements with respect to the future price of gold and
silver, the estimation of mineral reserves and resources, the
realization of mineral reserve and resource estimates, the timing
and amount of estimated future production, costs of production,
expected capital expenditures, costs and timing of the development
of new deposits, success of exploration activities, permitting time
lines, currency fluctuations, requirements for additional capital,
government regulation of mining operations, environmental risks,
unanticipated reclamation expenses, title disputes or claims and
limitations on insurance coverage. The words "plans," "expects," or
"does not expect," "is expected," "budget," "scheduled,"
"estimates," "forecasts," "intends," "anticipates," or "does not
anticipate," or "believes," or variations of such words and phrases
or statements that certain actions, events or results "may,"
"could," "would," "might," or "will be taken," "occur" or "be
achieved" and similar expressions identify forward-looking
statements. Forward-looking statements are necessarily based upon a
number of estimates and assumptions that, while considered
reasonable by Kinross and Bema as of the date of this media
release, are inherently subject to significant business, economic
and competitive uncertainties and contingencies. The estimates and
assumptions of each of Kinross and Bema include, but are not
limited to, the various assumptions set forth in their respective
most recent annual information form and management's discussion and
analysis as well as: (1) there being no significant disruptions
affecting operations, whether due to labour disruptions, supply
disruptions, damage to equipment or otherwise during the balance of
2006; (2) development at Paracatu proceeding on a basis consistent
with our current expectations; (3) permitting and development at
Buckhorn proceeding on a basis consistent with Kinross' current
expectations; (4) that the exchange rate between the Canadian
dollar, Brazilian real, Chilean peso and the U.S. dollar will be
approximately consistent with current levels; (5) certain price
assumptions for gold and silver; (6) prices for natural gas, fuel
oil, electricity and other key supplies remaining consistent with
current levels; (7) production forecasts meet expectations for the
balance of 2006; and (8) the accuracy of our current mineral
reserve and mineral resource estimates. Known and unknown factors
could cause actual results to differ materially from those
projected in the forward-looking statements. Such factors include,
but are not limited to: fluctuations in the currency markets;
fluctuations in the spot and forward price of gold or certain other
commodities (such as silver, diesel fuel and electricity); changes
in national and local government legislation, taxation, controls,
regulations and political or economic developments in Canada, the
United States, Chile, Brazil, Russia or other countries in which we
do or may carry on business in the future; business opportunities
that may be presented to, or pursued by, us; operating or technical
difficulties in connection with mining or development activities;
the speculative nature of gold exploration and development,
including the risks of obtaining necessary licenses and permits;
and diminishing quantities or grades of reserves. In addition,
there are risks and hazards associated with the business of gold
exploration, development and mining, including environmental
hazards, industrial accidents, unusual or unexpected formations,
pressures, cave-ins, flooding and gold bullion losses (and the risk
of inadequate insurance, or inability to obtain insurance, to cover
these risks). Many of these uncertainties and contingencies can
affect Kinross' and Bema's actual results and could cause actual
results to differ materially from those expressed or implied in any
forward-looking statements made by, or on behalf of, Kinross or
Bema. There can be no assurance that forward-looking statements
will prove to be accurate, as actual results and future events
could differ materially from those anticipated in such statements.
All of the forward-looking statements made in this media release
are qualified by these cautionary statements. Specific reference is
made to the respective most recent annual information form, annual
management's discussion and analysis and other filings with the
securities regulators of Canada and the United States of each of
Kinross and Bema. In addition, the following factors, among others,
related to the proposed business combination of Kinross and Bema
could cause actual results to differ materially from the
forward-looking statements: the businesses of Kinross and Bema may
not be integrated successfully or such integration may be more
difficult, time-consuming or costly than expected; and the expected
combination benefit from the Kinross and Bema transaction may not
be fully realized or not realized within the expected time frame.
These factors are not intended to represent a complete list of the
factors that could affect Kinross or Bema or the combination of
Kinross and Bema. Each of Kinross and Bema disclaims any intention
or obligation to update or revise any forward-looking statements
whether as a result of new information, future events or otherwise,
or to explain any material difference between subsequent actual
events and such forward-looking statements, except to the extent
required by applicable law. For further information regarding
Proven and Probable Mineral Reserves and Measured and Indicated
Mineral Resources for either of Kinross or Bema, please refer to
each companies 2005 Mineral Reserve and Resource statements as
filed with regulatory authorities. Qualified persons as defined by
National Instrument 43-101 are: Rob Henderson, Kinross Gold
Corporation for all Kinross assets Tom Garagan, Bema Gold
Corporation for Kupol Brian Scott, Bema Gold Corporation for
Julietta L. Smith, AMEC for Cerro Casale DATASOURCE: Kinross Gold
Corporation CONTACT: Kinross, Investor Relations Contact: Tracey
Thom, , (office) (416) 365-1362, (mobile) (416) 301-9022; Media
Contact: Wilcox Group (416) 203-6666; Bema, Investor Relations
Contact: Ian Maclean, , (604) 681-8371
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