KINROSS GOLD CORPORATION AGREES TO MERGE WITH AMAX GOLD INC.
Creates the fifth largest North American Gold Producer
Toronto, Ontario and Denver, Colorado (February 9, 1998) - Kinross Gold Corporation (TSE-K; NYSE-
KGC) and Amax Gold Inc. (NYSE-AU; TSE-AXG) announce that they have entered into a merger
agreement providing for a combination of their businesses. In the merger, each share of Amax Gold
will be converted into 0.8004 of a common share of Kinross. Cyprus Amax Minerals Company, the
holder of approximately 59% Amax Gold’s common shares has agreed to contribute US$135 million of
cash and indebtedness to Kinross at the effective time of the merger in exchange for approximately 35
million common shares of Kinross. The merger will result in the current shareholders of Kinross owning
50% of new Kinross and the current shareholders of Amax Gold (after giving effect to the infusion of US
$135 million) owning 50% of the new Kinross.
After the completion of the merger, Kinross will be the fifth largest gold producer in North America with
annual production of 1.2 million ounces and a market capitalization of approximately US$1 billion (C
$1.5 billion). Cyprus Amax has agreed to vote for the merger.
Robert M. Buchan, Chairman and Chief Executive Officer of the new Kinross said "the combination of
Kinross’ mines and strong balance sheet with Amax Gold’s efficient new open pit mines will create a
well-financed senior gold producer with cash costs in the lowest quartile of world production. The new
Kinross is the elevated platform from which we will continue to pursue our aggressive growth strategy."
"We are delighted to combine these two companies into what we believe will be one of the industry’s
strongest players", said Milton H. Ward, Chairman and Chief Executive Officer of Amax Gold, and the
Vice-Chairman of the new Kinross. "All Amax Gold shareholders should benefit from their stake in the
continued development of these quality global producers."
In the merger transaction, approximately US$335 million of Amax Gold debt will be eliminated. This
will be accomplished through the following:
q
the application of about US$100 million of currently available cash from Kinross for repayment of
debt;
an infusion of capital and conversion of outstanding inter-company debt into equity totaling US
$135 million from Cyprus Amax; and
additional equity capital of approximately US$120 million raised through a Kinross "bought
deal" (in Canada) subscription rights offering entered into at the same time as the merger
agreement.
q
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The transaction is expected to provide substantial benefits to both Kinross and Amax Gold shareholders
and elevate the new Kinross to the ranks of the senior North American gold producers. The new Kinross
expects to have:
  PDF to HTML - Convert PDF files to HTML files
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production of 1.2 million ounces at an estimated total cash operating cost of approximately US
$210 per ounce in 1998;
a global platform with 12 mines in the U.S., Canada, Chile, Russia and Zimbabwe;
reserves of 10.1 million ounces included in a total resource of about 27 million ounces;
three flagship mines at Fort Knox, Hoyle Pond and Kubaka that will contribute the bulk of the
new Kinross cash flow;
a strong balance sheet with working capital of approximately US$170 million;
a management team led by Mr. Buchan;
corporate and exploration synergies estimated to save US$5 million per year; and
a reduction of about US$25 million of interest expense annually as a result of the debt
repayment.
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Under terms of the merger transaction, Amax Gold shareholders will receive 0.80 shares of Kinross for
each share of Amax Gold. Cyprus Amax will contribute a total US$135 million through a cash
investment and a debt-for-equity swap. Cyprus will also receive approximately 10 million warrants to
purchase common shares of Kinross at a price equal to 150% of the price of Kinross common shares on
the closing of the merger. Holders of Amax Gold’s convertible preferred shares, which currently have
the right to convert into Amax Gold common shares, will receive a right to convert these preferred
shares into common shares of Kinross. Cyprus Amax has entered into a five year stand still agreement
with Kinross.
At the close of the merger transaction and the new equity issue, current Kinross shareholders will hold
about 43 percent of the new Kinross, Cyprus Amax about 31 percent, Amax Gold minority shareholders
about 13 percent and Kinross subscription right holders about 13 percent.
The merger transaction is structured as tax-free for Amax Gold shareholders who are US residents and
will have no tax consequences for Kinross shareholders. The 10-member board of directors of the new
Kinross will consist of five nominees from Kinross, three from Cyprus Amax and two representing Amax
Gold.
The merger transaction has been approved by the boards of directors of Kinross, Amax Gold and
Cyprus Amax and by a Special Committee of the Amax Gold Board of Directors . The agreement is
subject to majority approval of shareholders of Kinross and Amax Gold. Cyprus Amax has irrevocably
agreed to vote its Amax Gold shares in favour of the merger. The merger is expected to closed before
the end of June, 1998.
The new Kinross will be based in Toronto, Canada and its shares will be listed on both The Toronto
Stock Exchange and the New York Stock Exchange.
Kinross is a producer of precious metals based in Toronto with mines and property interests in Canada,
the U.S., Russia and Zimbabwe.
Amax Gold is based in Denver and owns gold mines in the U.S., Russia and Chile and explores for gold
in the Americas, Russia, Africa and Australia.
Merrill Lynch & Co. and CIBC Wood Gundy Securities Inc. acted as financial advisor to Kinross Gold
Corporation. Salomon Smith Barney served as financial advisor to Amax Gold and SBC Warburg Dillon
  PDF to HTML - Convert PDF files to HTML files
Reed was the financial advisor to the Special Committee of Amax Gold. BT Wolfensohn served as
financial advisor to Cyprus Amax.
This press release includes certain "Forward Looking Statements" within the meaning of section 21E of
the United States Securities Exchange Act of 1934, as amended. All statements, other than statements
of historical fact, included herein, including without limitation, statements regarding potential
mineralization and reserves, exploration results and future plans and objectives of Kinross, Amax Gold
and Cyprus Amax are forward looking statements that involve various risks and uncertainties. There
can be no assurance that such statements will prove to be accurate, and actual results and future
events could differ materially from those anticipated in such statements. Important factors that could
cause actual results to differ materially from Kinross, Amax Gold and Cyprus Amax expectations are
disclosed under the heading "Risk Factors" and elsewhere in Kinross’, Amax Gold’s and Cyprus Amax’s
documents filed from time to time with The Toronto Stock Exchange, the New York Stock Exchange,
the United States Securities and Exchange Commission and other regulatory authorities.
This press release is not an offer of securities for sale in the United States. Any such offer will be made
only by means of a prospectus.
- 30 -
For additional information contact:
Robert M. Buchan
Chairman and Chief Executive Officer
Kinross Gold Corporation
Tel. (416) 365-5650
Gordon A. McCreary
Vice President Investor Relations
and Corporate Development
Kinross Gold Corporation
(416) 365-5132
Marj Charlier
Director Investor Relations
Amax Gold Inc.
(303)643-5625
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  PDF to HTML - Convert PDF files to HTML files
KINROSS GOLD CORPORATION AGREES TO MERGE WITH AMAX GOLD INC.
Creates the fifth largest North American Gold Producer
Toronto, Ontario and Denver, Colorado (February 9, 1998) - Kinross Gold Corporation (TSE-K; NYSE-
KGC) and Amax Gold Inc. (NYSE-AU; TSE-AXG) announce that they have entered into a merger
agreement providing for a combination of their businesses. In the merger, each share of Amax Gold
will be converted into 0.8004 of a common share of Kinross. Cyprus Amax Minerals Company, the
holder of approximately 59% Amax Gold’s common shares has agreed to contribute US$135 million of
cash and indebtedness to Kinross at the effective time of the merger in exchange for approximately 35
million common shares of Kinross. The merger will result in the current shareholders of Kinross owning
50% of new Kinross and the current shareholders of Amax Gold (after giving effect to the infusion of US
$135 million) owning 50% of the new Kinross.
After the completion of the merger, Kinross will be the fifth largest gold producer in North America with
annual production of 1.2 million ounces and a market capitalization of approximately US$1 billion (C
$1.5 billion). Cyprus Amax has agreed to vote for the merger.
Robert M. Buchan, Chairman and Chief Executive Officer of the new Kinross said "the combination of
Kinross’ mines and strong balance sheet with Amax Gold’s efficient new open pit mines will create a
well-financed senior gold producer with cash costs in the lowest quartile of world production. The new
Kinross is the elevated platform from which we will continue to pursue our aggressive growth strategy."
"We are delighted to combine these two companies into what we believe will be one of the industry’s
strongest players", said Milton H. Ward, Chairman and Chief Executive Officer of Amax Gold, and the
Vice-Chairman of the new Kinross. "All Amax Gold shareholders should benefit from their stake in the
continued development of these quality global producers."
In the merger transaction, approximately US$335 million of Amax Gold debt will be eliminated. This
will be accomplished through the following:
q
the application of about US$100 million of currently available cash from Kinross for repayment of
debt;
an infusion of capital and conversion of outstanding inter-company debt into equity totaling US
$135 million from Cyprus Amax; and
additional equity capital of approximately US$120 million raised through a Kinross "bought
deal" (in Canada) subscription rights offering entered into at the same time as the merger
agreement.
q
q
The transaction is expected to provide substantial benefits to both Kinross and Amax Gold shareholders
and elevate the new Kinross to the ranks of the senior North American gold producers. The new Kinross
expects to have:
  PDF to HTML - Convert PDF files to HTML files
q
production of 1.2 million ounces at an estimated total cash operating cost of approximately US
$210 per ounce in 1998;
a global platform with 12 mines in the U.S., Canada, Chile, Russia and Zimbabwe;
reserves of 10.1 million ounces included in a total resource of about 27 million ounces;
three flagship mines at Fort Knox, Hoyle Pond and Kubaka that will contribute the bulk of the
new Kinross cash flow;
a strong balance sheet with working capital of approximately US$170 million;
a management team led by Mr. Buchan;
corporate and exploration synergies estimated to save US$5 million per year; and
a reduction of about US$25 million of interest expense annually as a result of the debt
repayment.
q
q
q
q
q
q
q
Under terms of the merger transaction, Amax Gold shareholders will receive 0.80 shares of Kinross for
each share of Amax Gold. Cyprus Amax will contribute a total US$135 million through a cash
investment and a debt-for-equity swap. Cyprus will also receive approximately 10 million warrants to
purchase common shares of Kinross at a price equal to 150% of the price of Kinross common shares on
the closing of the merger. Holders of Amax Gold’s convertible preferred shares, which currently have
the right to convert into Amax Gold common shares, will receive a right to convert these preferred
shares into common shares of Kinross. Cyprus Amax has entered into a five year stand still agreement
with Kinross.
At the close of the merger transaction and the new equity issue, current Kinross shareholders will hold
about 43 percent of the new Kinross, Cyprus Amax about 31 percent, Amax Gold minority shareholders
about 13 percent and Kinross subscription right holders about 13 percent.
The merger transaction is structured as tax-free for Amax Gold shareholders who are US residents and
will have no tax consequences for Kinross shareholders. The 10-member board of directors of the new
Kinross will consist of five nominees from Kinross, three from Cyprus Amax and two representing Amax
Gold.
The merger transaction has been approved by the boards of directors of Kinross, Amax Gold and
Cyprus Amax and by a Special Committee of the Amax Gold Board of Directors . The agreement is
subject to majority approval of shareholders of Kinross and Amax Gold. Cyprus Amax has irrevocably
agreed to vote its Amax Gold shares in favour of the merger. The merger is expected to closed before
the end of June, 1998.
The new Kinross will be based in Toronto, Canada and its shares will be listed on both The Toronto
Stock Exchange and the New York Stock Exchange.
Kinross is a producer of precious metals based in Toronto with mines and property interests in Canada,
the U.S., Russia and Zimbabwe.
Amax Gold is based in Denver and owns gold mines in the U.S., Russia and Chile and explores for gold
in the Americas, Russia, Africa and Australia.
Merrill Lynch & Co. and CIBC Wood Gundy Securities Inc. acted as financial advisor to Kinross Gold
Corporation. Salomon Smith Barney served as financial advisor to Amax Gold and SBC Warburg Dillon
  PDF to HTML - Convert PDF files to HTML files
Reed was the financial advisor to the Special Committee of Amax Gold. BT Wolfensohn served as
financial advisor to Cyprus Amax.
This press release includes certain "Forward Looking Statements" within the meaning of section 21E of
the United States Securities Exchange Act of 1934, as amended. All statements, other than statements
of historical fact, included herein, including without limitation, statements regarding potential
mineralization and reserves, exploration results and future plans and objectives of Kinross, Amax Gold
and Cyprus Amax are forward looking statements that involve various risks and uncertainties. There
can be no assurance that such statements will prove to be accurate, and actual results and future
events could differ materially from those anticipated in such statements. Important factors that could
cause actual results to differ materially from Kinross, Amax Gold and Cyprus Amax expectations are
disclosed under the heading "Risk Factors" and elsewhere in Kinross’, Amax Gold’s and Cyprus Amax’s
documents filed from time to time with The Toronto Stock Exchange, the New York Stock Exchange,
the United States Securities and Exchange Commission and other regulatory authorities.
This press release is not an offer of securities for sale in the United States. Any such offer will be made
only by means of a prospectus.
- 30 -
For additional information contact:
Robert M. Buchan
Chairman and Chief Executive Officer
Kinross Gold Corporation
Tel. (416) 365-5650
Gordon A. McCreary
Vice President Investor Relations
and Corporate Development
Kinross Gold Corporation
(416) 365-5132
Marj Charlier
Director Investor Relations
Amax Gold Inc.
(303)643-5625
Home
•
Corporate
•
Operations
•
Investors
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News
•
Contact
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Search
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