Agnico-Eagle to acquire TMAC in $286 million deal
Agnico-Eagle Mines Ltd. [AEM-TSX, NYSE] has agreed to acquire all of the outstanding shares of TMAC Resources Inc. [TMR-TSX] for $2.20 each in a friendly cash transaction worth $286.6 million.
News of the deal comes just weeks after the Canadian government blocked the sale of TMAC to Chinese company Shandong Gold Mining Co. Ltd. on national security grounds.
The offer price represents a premium of approximately 26% to the offer price of $1.75 per TMAC share paid by Shandong and a premium of approximately 66% to TMAC’s 20-day volume-weighted average price as at January 4, 2021.
TMAC shares reacted to the news by soaring 39% or $0.61 cents to $2.18 on volume of 3.27 million. The shares are currently trading in a 52-week range of $3.74 and 44 cents. Agnico eased 2.6% or $2.49 to $93.72 on volume of 351,594.
TMAC is a gold producer with a 100% stake in the Hope Bay gold project in Nunavut.
The Hope Bay property covers a greenstone belt, which is 80 kilometres long and 20 kilometres wide and includes three camps with significant infrastructure, including 2,000 tonne-per-day processing plant, and underground developments at the Doris and Boston mines.
The Doris mine reached the commercial production stage in June 2017. TMAC said it produced 18,420 ounces of gold in Q3 2020 and 79,680 year to date.
TMAC has been forecasting production of 95,000 to 100,000 ounces of gold in 2020.
In connection with the closing of the transaction announced on Tuesday, Agnico Eagle will retire TMAC’s outstanding debt and deferred interest and fees.
Resource Capital Funds, Newmont Goldcorp. Corp. [NGT-TSX; NEM-NYSE], Shandong and all directors and officers of TMAC, collectively holding 62.3% of TMAC’s outstanding shares have entered into agreements with Agnico Eagle that include obligations to co-operate in seeking the Agnico Final Order and not to solicit competing transactions or take actions that would interfere with the completion of the transaction.
The transaction will be completed by way of a plan of arrangement under the Business Corporations Act (Ontario) and is subject to various approvals. TMAC intends to seek the Agnico Final Order at a hearing before the Ontario Superior Court of Justice to be held by Zoom on January 20, 2021. The companies are hoping to consummate the transaction on or before February 8, 2021.