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Detour Gold Corp. has a young mine near Detour Lake in Northern Ontario. Detour’s Toronto-listed shares fell about 1% to $25.33 on Thursday.

Detour Gold

Kirkland Lake Gold Ltd’s $4.4-billion all-stock offer to buy rival Detour Gold Corp. has won backing from two influential proxy advisory firms on grounds the target’s shareholders would reap benefits from a larger company, bolstering chances of the deal going ahead.

Detour Gold said on Thursday that Glass Lewis & Co. and Institutional Shareholder Services Inc. recommended shareholders vote for in favor of the takeover, which Kirkland has said will generate up to US$100-million in annual savings and add 600,000 ounces to its annual capacity.

Kirkland in November offered 0.4343 share for each Detour Gold share amid a wave of gold sector consolidation. But Kirkland investors balked at the 24-per-cent premium, sending the shares down sharply.

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ISS said Detour shareholders would benefit from holding a significant stake in a multiasset gold miner with significantly lower production costs and a more favorable risk profile.

“The premium, albeit muted as a result of the post-announcement decline in the acquirer’s shares, also appears more meaningful in an M&A environment that promotes deals that offer synergies in the place of control premiums,” the firm said.

Detour’s Toronto-listed shares fell about 1 per cent to $25.33 on Thursday. Kirkland stock was flat at $58.13.

Glass Lewis said in a statement dated Jan. 15 that Kirkland’s proposal is in the best interests of Detour shareholders, giving them exposure to Kirkland’s high-quality assets as investors in a senior gold producer.

“The support of these leading independent proxy advisers further demonstrates that the transaction represents a compelling opportunity for our shareholders to participate in the creation of a diversified, low-cost and growth-oriented senior gold producer with enhanced financial flexibility,” Detour chief executive Mick McMullen said in a statement.

Shareholders of both companies are slated to vote Jan. 28.

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