Agnico-Eagle Expands – Analyst Blog

Canadian gold producer Agnico-Eagle Mines Limited (AEM) has entered into an agreement with Comaplex Minerals Corporation, a company exploring and developing mineral properties in Canada, to acquire the remaining 87.7% shares of Comaplex. Agnico already owns 12.3% stake in Comaplex.

Under the terms of the transaction, each shareholder of Comaplex other than Agnico-Eagle will receive 0.1576 of an Agnico-Eagle share for each Co maplex share. Additionally, at closing, each Comaplex shareholder other than Agnico-Eagle and Perfora Investments S.a.r.l. will receive one common share of a newly formed, wholly owned, subsidiary of Comaplex in respect of each Comaplex share. The total value to be received by Comaplex shareholders, other than Agnico-Eagle and Perfora, was estimated at $9.95 (C$10.32) per Comaplex share.

Post acquisition, Agnico would own a 100% interest in the advanced stage Meliadine gold project located in Nunavut, Canada, which is Comaplex’s key asset. The Meliadine gold mine is also close to Agnico-Eagle’s Meadowbank gold mine. Meliadine currently has 3.29 million ounces of gold resources.

However, the transaction is expected to close in July 2010 subject to approval by Comaplex shareholders and court and regulatory approvals. Both the boards of directors have approved the acquisition agreement. Comaplex has agreed to pay Agnico-Eagle a termination fee of $19.28 million (C$20 million) if the transaction is not completed.

Agnico-Eagle is back on track to double its gold output in 2010 to more than a million ounces from 492,972 ounces produced in 2009. The company’s reserves have increased modestly. However, resources were up significantly over the year. We expect 2010 to be a year of additions to reserves. Agnico-Eagle’s industry-leading growth profile, relatively low operating costs and low political risk inspire optimism on the stock’s performance in the near term. We remain Neutral on Agnico.