Kinross Gold has agreed to acquire Great Bear Resources, a publicly-listed Canadian gold exploration company, for an upfront consideration of C$1.8bn ($1.42bn).

Great Bear is focused on advancing its fully-owned Dixie gold exploration project in Northwestern Ontario, Canada.

The Dixie project is made up of 9,140ha of contiguous claims that span over 22km. It is said to have a year-round accessibility to highway.

The project is located in proximity to major infrastructure provided by the Red Lake town, located nearly 25km to the northwest.

The other assets of Great Bear include Sobel, Pakwash, and the Red Lake North properties, all located in the Red Lake District in Ontario.

Kinross Gold president and CEO J Paul Rollinson said: “The Dixie project represents an exciting opportunity to develop a potentially top tier deposit into a large, long-life mine complex.

“In addition to the prospect of developing a quality, high-grade open pit mine, we also believe that a significant portion of the asset’s value is its longer-term potential, which includes the view of a sizeable underground operation.

“Kinross has the strong technical expertise and experience to successfully advance the project from exploration to development and unlock considerable value for our shareholders.”

As per the terms of the deal, Great Bear’s shareholders will get an upfront consideration of C$29 ($22.9) per share from Kinross Gold.

According to Kinross Gold, the shareholders will have the option of being paid fully in cash or exchange each of their shares in Great Bear Resources for 3.8564 of Kinross Gold shares.

The upfront consideration will be conditional on maximum aggregate cash consideration of around C$1.4bn ($1.11bn) or maximum aggregate shares issuable of 95.8 million, based on the election of Great Bear’s shareholders.

Additionally, the shareholders will get contingent consideration of around C$58.2m ($45.98m). This will be subject to Kinross Gold’s announcement of commercial production at the Dixie project, provided there is a disclosure of at least 8.5 million gold ounces of measured and indicated mineral resources.

Great Bear Resources president and CEO Chris Taylor said: “As a senior gold producer, Kinross has the financial strength, technical expertise, and commitment to the highest ESG practices to advance the Dixie project at the pace and scale that this industry-leading discovery deserves.

“Dixie will remain a centrepiece project that will receive significant development and exploration focus, which will continue to unlock and maximise the project’s value, while mitigating our shareholders’ exposure to the risks of a single-asset developer.”

The deal is subject to approval from Great Bear Resources’ shareholders, court approval, regulatory approvals, and other customary closing conditions. Following these, the closing is expected to occur in Q1 2022.

It is backed by Great Bear Resources’ directors and senior officers and certain securityholders, who have nearly 20% of the firm’s voting securities.