Agnico Eagle Inks Asset Deal With Yamana on Canadian Malartic"s Exploration Projects
- By Alberto Abaterusso
Agnico Eagle Mines Limited (AEM) on Thursday informed shareholders that it inked a $162.5 million worth asset deal with Yamana Gold Inc. (AUY) to purchase all of Yamana"s indirect 50% interest stake in Canadian Malartic Corp."s Canadian exploration assets.
The transaction also includes the Hammond Reef Gold project and the Kirkland Lake project, while the Canadian Malartic mine plus the related assets will continue to be owned and operated by Agnico Eagle Mines together withYamana Gold.
Warning! GuruFocus has detected 4 Warning Signs with AEM. Click here to check it out.
The intrinsic value of AEM
Canadian Malartic Corp. is owned by Agnico Eagle Mines and Yamana Gold under a 50% joint venture agreement. The asset is also operated by the two Canadian gold mining companies.
Once the asset deal is closed, Agnico Eagle Mines will become the sole owner of Canadian Malartic Corporation.
Sean Boyd, the CEO of Agnico Eagle mines, commented on the asset deal with Yamana Gold:
"The purchase of the CMC asset portfolio enhances our longer-term development pipeline, and provides us with potential production growth post our current mine buildout in Nunavut."
Boyd also said that the Kirkland Lake property package improves Agnico Eagle Mines" current mineral reserves and provides the miner with near-term exploration upside. Concerning the Hammond Reef project, Sean Boyd sees the asset as a "good optionality to a potential rise in the gold price."
With regard to Yamana Gold, this transaction, whose closing is scheduled for first quarter 2018, will provide the company with additional financial flexibility over the next one to three years.
This transaction should produce an impact on the market value of Agnico Eagle and Yamana Gold over the next trading weeks.
Agnico Eagle Mines is trading at $44.54 per share on the New York Stock Exchange while Yamana Gold is trading at $2.86.
For the 52-weeks through Dec. 21, Agnico Eagle has gained 15% and Yamana Gold has gained 13%. However, both gold stocks have underperformed the VanEck Vectors Gold Miners ETF, respectively, by 2% and 4%.
Agnico Eagle Mines has a price-book (P/B) ratio of 2.18 versus an industry median of 2.01 and an EV to Ebitda ratio of 10.34 versus an industry average of 10.14. Agnico Eagle has a 52-weeks range of $37.95 to $51.86. The Relative Strength Indicator (RSI) is 56.46.
Yamana Gold has a price-book (P/B) ratio of 0.62 versus an industry median of 2.01 and an EV to Ebitda ratio of -42.47 versus an industry average of 10.14. Yamana Gold has a 52-weeks range of $2.21 to $3.65. The Relative Strength Indicator (RSI) is 65.07.
Disclosure: No positions in any stock mentioned in this article.
This article first appeared on GuruFocus.
Warning! GuruFocus has detected 4 Warning Signs with AEM. Click here to check it out.
The intrinsic value of AEM
