Canada-based mining firm Kirkland Lake Gold has signed an agreement to acquire St Andrew Goldfields in a deal valued around C$178m ($133m) to create a new gold producing company.

Existing shareholders of Kirkland Lake and St Andrew will own 71% and 29% respectively of the combined company once the proposed transaction concludes.

Kirkland Lake Gold president and CEO George Ogilvie said: "This transaction adds high-quality assets and ounces to our existing operations and is immediately accretive to our production, net asset value and cash-flow on a per share basis.

"With this acquisition we continue to focus on gold production in proven and safe mining jurisdictions."

The combined company with focus on Canada will have increased financial flexibility and operate four mines and two mills in Ontario’s southern Abitibi greenstone belt.

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St Andrew Goldfields president and CEO Duncan Middlemiss said: "St Andrew shareholders will have the opportunity to benefit from the promising potential of the combined company, with greater trading liquidity and capital markets exposure to drive shareholder value.

"Both St Andrew Goldfields and Kirkland Lake Gold are pleased to bring forth a consolidated Abitibi focused company, as we all believe in the huge potential of our assets."

The deal requires shareholder and court approvals and is subject to applicable regulatory approvals as well as the satisfaction of certain other closing conditions.

Kirkland Lake will have about 117.6 million common shares issued and outstanding following the transaction.