Canadian gold producer Agnico-Eagle Mines Ltd. (AEM) has recently announced the completion of an agreement with Comaplex Minerals Corp. (a Calgary-based junior exploration company) related to the acquisition of Meliadine Holdings Inc. Meliadine is a Canada based gold project owned by Comaplex.
According to the terms of the agreement signed in April this year, shareholders will receive 0.1576 of an Agnico-Eagle share for each Comaplex share. Additionally, at closing, other than Agnico-Eagle and Perfora Investments S.a.r.l. each Comaplex share will receive one share of a newly formed, wholly owned subsidiary of Comaplex. The total value of each Comaplex share, other than Agnico-Eagle and Perfora shares, is estimated to be C$10.32 per (US $9.97).
Agnico aims to grow through internal expansion and small acquisitions, and maintains a steady growth of output and reserves. Comaplex’s key asset, the Meliadine gold project located in Nunavut, Canada, is close to Agnico-Eagle’s Meadowbank mine, which has commenced production recently. Agnico believes that this acquisition will create long-term synergies as the activities and resources at the Meliadine project are well matched to that of the Meadowbank mine.
The company is on track to achieve its goal of doubling gold output in 2010 to more than a million ounces from 492,972 ounces produced in 2009. Meliadine currently has 3.29 million ounces of gold resources. Agnico plans to accelerate an underground exploration program at Meliadine to expand and convert the large resource into reserves over the next two years.
Agnico-Eagle’s industry-leading growth profile, relatively low operating costs, strong management team and low political risk inspire optimism on the stock’s performance in the near term. We remain Neutral on Agnico-Eagle supported by the short term (1 to 3 months) Zacks #3 Rank (“Hold”).
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