Agnico Eagle is looking to expand its mining footprint in the Abitibi region.
The Kirkland Lake and Detour Lake gold miner is making a takeover bid for O3 mining, a neighbouring gold company on the Quebec side of the prolific Abitibi mineral belt.
Agnico announced Dec. 12 that it has entered into a definitive support agreement to acquire all of the outstanding common shares of O3 in an offer valued at $204 million.
The proposed deal is built around the acquisition of O3 Mining's main asset, its Marban Alliance property, located outside Val d'Or, that is next to Agnico Eagle's Canadian Malartic mine complex.
Marban Alliance property is a proposed open-pit mining operation containing 1.7 million ounces of gold in the indicated category grading at 1.03 grams per tonnes.
O3 has spent five years getting the Marban deposit up to an advanced stage of exploration and mine readiness. O3 also possesses other exploration projects on its 128,000 hectares of property in Quebec.
Agnico is the world's third largest gold producer with mines in Canada, Australia, Finland and Mexico.
Agnico is looking to integrate this property with the larger Canadian Malartic land package to “create significant and unique synergies” in using the existing Canadian Malartic mill and the existing open-pit workforce and equipment fleet. Agnico believes Marban can become an open-pit operation similar to its Barnet open-pit mine on the Canadian Malartic property.
Agnico Eagle said it will formally make the offer to O3 shareholders next week on Dec. 19. The offer will be open for acceptance until end of the business day on Jan. 23.
A special committee of independent directors of O3 is recommending that shareholders tender their common shares and accept the offer.
"Consistent with our regional strategy, this transaction is a tuck-in of the Marban deposit to our Canadian Malartic complex,” said Agnico Eagle's president and CEO, Ammar Al-Joundi, in the news release.
“The Marban deposit is expected to be complementary to other ‘fill-the-mill’ opportunities at Canadian Malartic, further improving the production profile at a long-life world-class asset. Our extensive operation, exploration and community experience is expected to enhance the value generated from the Marban Alliance property and unlock further potential at our Abitibi platform,” he added.
"The all-cash offer at a significant premium to market is an excellent outcome for our shareholders and is validation of the efforts made by the O3 Mining team,” said José Vizquerra, O3 Mining's president-CEO, in a statement.
“Having diligently advanced the Marban Alliance project over the past five years, the timing is right for O3 Mining to sell to a more experienced operator that can efficiently navigate the project through permitting and construction.”
