|Osisko Mining’s Canadian Malartic is the largest producing gold mine in Canada; its output will average approximately 600,000 oz/y for the next 14 years. (Photo courtesy of Osisko Mining)|
Agnico Eagle Mines, Yamana Gold, and Osisko Mining announced on April 16 an agreement whereby Agnico Eagle and Yamana will jointly acquire 100% of Osisko for total consideration of approximately C$3.9 billion, or C$8.15/share. The offer includes approximately C$1 billion in cash, approximately C$2.33 billion in Agnico Eagle and Yamana shares, and shares of a new company (Spinco) with an implied value of approximately C$575 million.
On April 21, Goldcorp announced it would not increase its then current offer to acquire Osisko, ending a bidding war that began in mid-January when Goldcorp made a hostile offer that valued Osisko shares at C$5.95/share.
Under the April 16 agreement, Yamana and Agnico Eagle will form a joint-acquisition entity that will acquire all of the outstanding common shares of Osisko, with Yamana and Osisko each owning 50%. Upon closing of the transaction, the two companies will form a joint committee to operate the Canadian Malartic mine in Québec, Osisko’s primary asset and the overriding target of the competitive bidding. The Agnico Eagle/Yamana partnership will also acquire Osisko’s Kirkland Lake assets and continue exploration of its Hammond Reef, Pandora and Wood-Pandora properties in Canada.
Following the transaction, Spinco will be granted a 5% net smelter royalty (NSR) on the Canadian Malartic mine; a 2% NSR on the Kirkland Lake assets; C$155 million in cash; all Osisko assets and liabilities in its Guerrero camp in Mexico; and other investments.
Osisko President and CEO Sean Roosen stated, “10 years ago we embarked on a journey to find a gold deposit. It was a plan that grew into the successful and highly profitable world-class mine that is now Canadian Malartic. From the beginning, we have never strayed from our objective of building shareholder value. With the announcement today of the combined bid by Yamana and Agnico Eagle, I believe we have delivered shareholders the superior value option to the hostile attempt to acquire our company.”
Canadian Malartic is the largest producing gold mine in Canada, with production planned to average approximately 600,000 oz/y for the next 14 years. For Agnico Eagle, it will join the company’s three other operating mines in Québec. For Yamana, which has its operating focus in Latin America, acquisition of its 50% interest in Canadian Malartic will provide entry into an mining-friendly jurisdiction in North America without the level of risk generally associated with entering new locales. The company will benefit from Canadian Malartic’s strong operating management and from Agnico Eagle’s decades-long experience in Québec.
Osisko’s acceptance of the Agnico Eagle/Yamana offer had been preceded by an agreement with Yamana in early April, whereby Yamana would have acquired 50% of Osisko in a complex transaction that valued Osisko’s shares at about C$7.60/share. On April 10, Goldcorp came back with a cash and share offer to acquire all of Osisko that valued Osisko’s shares at C$7.65/share. The $C8.15/share Agnico Eagle/Yamana offer followed on April 16, and Goldcorp’s offer expired on April 23.