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Gold miners Agnico Eagle and Kirkland Lake in C$13bn deal

By Joyanta Acharjee

13:00, 28 September 2021

Agnico Eagle's Meliadine mine
Agnico Eagle's Meliadine mine – Photo: Agnico Eagle

Two of Canada’s senior gold producers have agreed on a “merger of equals” in a stock deal valued at C$13.51bn (£7.86bn).

Canada's Agnico Eagle Mines will merge with Kirkland Lake Gold. Agnico Eagle shareholders will own around 54% of the combined company – which retains the Agnico Eagle name and Toronto head office – while Kirkland Lake shareholders will hold 46%. The boards of both companies have unanimously approved the combination.

Under the terms of the deal, Kirkland Lake shareholders will receive 0.7935 of an Agnico Eagle common share per Kirkland Lake share held, valuing each Kirkland share at C$50.63, a discount of 9% to Monday's closing price on Canada’s Toronto Stock Exchange.

The companies anticipate the deal with close in December or the first quarter of 2021.

Tuesday’s proposed deal is the latest chapter of industry consolidation. In 2018 Barrick Gold bought Randgold Resources for $6bn and the next year, Newmont purchased Canadian rival Goldcorp for $10bn.

IKN blog broke news of the deal

Industry blog IKN broke the news that Kirkland Lake was up for sale.

“This merger starts a new chapter in Agnico Eagle’s 64-year history and creates the leading low risk global gold company with growing production, low costs and strong ESG leadership,” Agnico Eagle chief executive Sean Boyd said in a press release.

“Over time, we believe that the gold industry will continue to evolve and consolidate and with this transaction we are well positioned to take advantage of high-quality opportunities and be a true Canadian mining champion,” Boyd said.

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“Unique ‘strength-on-strength’ transaction”

“It is a unique ‘strength-on-strength’ transaction that combines the two global gold producers with the best track records for increasing per share value,” Kirkland Lake Gold president and chief executive Tony Makuch added.

“The deal creates an industry leader with a dominant position in the Canadian market that is deserving of a premium valuation and is poised to generate superior long-term shareholder value going forward,” Makuch said.

Agnico's Boyd will become the merged company's chair. Kirkland Lake's Makuch will become chief executive of the combined company, which will own six of Canada’s 10 largest gold mines.

48 million ounce reserve base

On conclusion, Agnico will have $2.3bn of available liquidity, a mineral reserve base of 48 million ounces of gold and a pipeline of development and exploration projects.

Agnico Eagle is a senior Canadian gold mining company that has produced precious metals since 1957. Its operating mines are located in Canada, Finland and Mexico with additional exploration activities in the US and Colombia. It has declared a cash dividend every year since 1983.

Kirkland Lake Gold produced 1,369,652 ounces of gold in 2020. It has operations in Northern Ontario, Canada (the Macassa and Detour Lake mines) and the Fosterville Mine in Australia.

TD Securities Inc., BofA Securities and Trinity Advisors are advising Agnico Eagle. Kirkland Lake Gold has engaged BMO Capital Markets and Maxit Capital.

Read more: Best gold stocks to watch in 2021

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