Canadian gold miners Agnico Eagle Mines (TSX: AEM) (NYSE: AEM) and Kirkland Lake Gold (TSX, NYSE: KL) (ASX: KLA) announced on Tuesday they are combining their businesses in a stock deal valued at C$13.5 billion (about $10.7bn), which creates the gold industry’s highest-quality senior producer.
As part of the transaction, Kirkland Lake Gold shareholders will receive 0.7935 of an Agnico Eagle common share for each stock they hold,. The deal values each Kirkland share at $50.63, or a discount of 9% to the stock’s Monday close.
Rumours of an imminent M&A deal involving Kirkland pushed its shares as much as 8.5% on Monday, closing 3.36% higher than Friday’s final price.
Once done, the merger would leave Agnico with $2.3 billion of available liquidity, a mineral reserve base of 48 million ounces of gold (969 million tonnes at 1.53 grams per tonne) and a pipeline of development and exploration projects.
Agnico Eagle shareholders will own about 54% of the combined company, while those of Kirkland Lake will have a 46% ownership.
The new Agnico Eagle will be led by a combined board and management team. Its current boss, Sean Boyd, will become executive chair of the board, while Kirkland Lake chief executive Tony Makuch will be the combined company’s CEO.
Toronto-based Agnico has mines are in Canada, Finland and Mexico as well as exploration and development activities in those countries and the United States and Colombia.
Kirkland Lake Gold has the Macassa mine and Detour Lake mine, both in northern Ontario, and the Fosterville mine in Australia.
More to come…
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