Agnico Eagle Mines (TSX: AEM) is set to expand its Canadian Malartic Complex in Quebec with the addition of O3 Mining (TSXV: OIII). The gold producer this morning announced that it has entered into a definitive agreement for the friendly takeover of O3.
The arrangement will see O3 Mining shareholders receive $1.67 in cash for each share of O3 held, which values the explorer at $204 million on a fully diluted basis. The offer represents a premium of 57% to the 20-day volume weighted average price of O3.
The draw to O3 for Agnico is its Marban Alliance property, which is adjacent to the Canadian Malartic Complex. The property currently boasts a resource estimate of 32,000 indicated gold ounces and 1.7 million inferred gold ounces at 1.03 g/t, which is found at the Marban deposit. A 2022 pre-feasibility study meanwhile estimated a net present value (5% discount) of $463 million on an after-tax basis, based on $1,700 gold.
“Consistent with our regional strategy, this transaction is a tuck-in of the Marban deposit to our Canadian Malartic complex. 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,” commented Ammar Al-Joundi, CEO of Agnico.
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The offer is set to occur via a take-over bid, with a circular to be mailed on December 19. Shareholders of O3 will then have at least 35 days to accept the offer. The arrangement is conditional on at least 66.7% of shareholders accepting the offer.
Directors and officers of O3, along with Extract Advisors LLC and Franklin Templeton managed funds, which collectively represent 22% ownership in O3, have entered into lock-up arrangements to tender their shares for the offer.
Agnico Eagle last traded at $123.76 on the TSX.
Information for this briefing was found via Sedar and the companies mentioned. The author has no securities or affiliations related to this organization. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.
