Agnico Eagle Mines Limited (AEM) and Yamana Gold Inc. (AUY) announced that they have completed the acquisition of the issued and outstanding common shares of Osisko Mining Corporation. Agnico Eagle and Yamana each own 50% of the shares of Osisko.
In Apr 2014, Agnico Eagle and Yamana agreed to acquire Osisko for a total consideration of about C$3.9 billion ($3.5 billion) or C$8.15 ($7.42) per share. The offer consisted of roughly C$1 billion in cash, around C$2.33 billion in Agnico Eagle and Yamana shares, and shares of a new company ("Spinco") with an implied value of roughly C$575 million.
Agnico Eagle and Yamana have set up a joint committee to operate the Canadian Malartic Mine in Quebec. Per the agreement, a number of assets of Osisko have been transferred to Osisko Gold Royalties Ltd. which, include a 5% net smelter royalty (NSR) on the Canadian Malartic mine, C$157 million cash, a 2% NSR on the Kirkland Lake assets, the Hammond Reef project, and certain other properties, all assets and liabilities of Osisko in its Guerrero camp, and certain other investments and assets.
The agreement is a strategic fit for both Agnico Eagle and Yamana. The acquisition is expected to be accretive to Agnico Eagle and will also improve its total cash cost and all-in sustaining cost profiles. The company will also get access to Canadian Malartic, the largest producing gold mine in Canada which has the potential to produce an average of roughly 600,000 gold ounces per year for 14 years. Agnico Eagle will also optimize the Canadian Malartic Mine plan.
Agnico Eagle will be able to manage its additional debt from the acquisition due to strong cash flow generation from a larger business. The company expects synergies from its other Abitibi operations. Moreover, the advanced Kirkland Lake project is expected to enrich the company’s portfolio. On the other hand, Yamana will establish its presence in Canada by joining forces with Agnico Eagle and develop an exploration program for the Kirkland Lake assets.
Agnico Eagle currently sports a Zacks Rank #1 (Strong Buy).