Agnico-Eagle, Kirkland Lake in $13.5 billion gold merger

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Agnico-Eagle Mines Ltd. [AEM-TSX, AEM-NYSE] and Kirkland Lake Gold Ltd. [KL-TSX, NYSE, KLA-ASX] have agreed to combine their operations in a merged company that will continue under the Agnico-Eagle name.

The companies said the deal is valued at $13.5 billion and will create the gold industry’s highest-quality senior producer with annual production of 3.4 million ounces in 2021. The combined company is expected to have the lowest-all-in-sustaining costs per ounce of the senior gold producers.

Under the agreement, Kirkland Lake shareholders will each receive 0.7935 of an Agnico-Eagle common share for each share held. The deal values Kirkland Lake at $50.63 per share, or a discount of 9.0% to the closing price of the shares on September 27, 2021.

“This merger starts a new chapter in Agnico-Eagle’s 64-year history, and creates the leading low-risk global gold company with growing production, low costs and strong ESG leadership,” said Agnico-Eagle CEO Sean Boyd.

The merger would leave Agnico with $2.3 billion of available liquidity, a mineral reserve base of 48 million ounces.

Kirkland Lake Gold CEO Tony Makuch said the merged company will boast an extensive pipeline of development and exploration projects to drive future growth, and the potential to realize significant operational and strategic synergies along Canada’s Abitibi-Kirkland Lake corridor.

The merger will be occur by way of a plan of arrangement that will require the approval of at least 66 and 2/3% of the votes cast by shareholders of Kirkland Lake Gold. The planned issuance of shares by Agnico-Eagle is subject to the approval of a simple majority of votes cast by the company’s shareholders at a special meeting.

It is anticipated that both shareholder meetings will take place in the fourth quarter of 2021 and that closing will occur in the first quarter of 2022.

The senior management team of the combined company will include Sean Boyd as Executive Chair of the Board and Tony Makuch as CEO. Ammar Al-Joundi has been named President of the combined entity.

Boyd said the deal starts a new chapter in Agnico Eagle’s 64-year history, and described Kirkland Lake as an excellent cultural fit with Agnico. A precious metals producer since 1957,  Agnico’s operating mines are located in Canada, Finland and Mexico. The company also has exploration and development activities in each of those countries as well as in the U.S. and Colombia.

Kirkland Lake Gold is a senior gold miner with operations in Canada and Australia. It has set a production goal of 1.3 million and 1.4 million ounces of gold this year, output that is anchored by three key operations, including the Macassa and Detour Lake mines in northern Ontario and the Fosterville Mine in Victoria State, Australia.

Ahead of the announcement, Kirkland Lake shares rose 3.36% or $1.81 to $55.70 on September 27, 2021. The shares traded in a 52-week range of $67.99 and $40.07.

On the eve of the announcement, Angico eased 0.44% or 28 cents to $63.81 to trade in a 52-week range of $112.25 and $63.76.

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