Canada-based Kirkland Lake Gold has signed an agreement to acquire Australian company Newmarket Gold in a C$1.01bn ($771m) deal.

The two companies will merge to create a new mid-tier gold company, which will have a market value of around C$2.4bn ($1.8bn) and capacity to produce more than 500,000oz of gold per annum.

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Existing shareholders of Kirkland and Newmarket will own 57% and 43% of the combined company respectively.

Kirkland Lake Gold president and CEO Tony Makuch said: “The potential that exists at Macassa as we continue to access higher grade mineralisation in the South Mine Complex at depth will be complemented by Fosterville, a high-grade operation with exceptional successful drilling results.

“The high-grade, visible gold-bearing Eagle Structure at the Fosterville mine continues to deliver impressive exploration success.”

“We see several opportunities to grow this company within the expanded portfolio, where the combined teams will have the financial and technical capabilities to execute on our progressive growth strategy.”

The combination of Kirkland Lake’s Macassa and Newmarket’s Fosterville will form the new company’s production backbone.

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Macassa Mine Complex is located in the Kirkland Lake gold camp, while the Fosterville Gold Mine is in the state of Victoria, Australia.

The combined company will operate seven mines and five mills in prospective gold camps with low geopolitical risk.

Newmarket Gold president and CEO Douglas Forster said: “The combination of our two flagship mines, Fosterville and Macassa, will be the cornerstone of an exciting new mid-tier gold producer with an attractive growth profile and operations in two of the best mining jurisdictions in the world.

“The high-grade, visible gold-bearing Eagle Structure at the Fosterville mine continues to deliver impressive exploration success, leading to record mill grades and increased production and we are confident that Fosterville will remain a high-grade producer for many years.”