Agnico Eagle To Acquire Yamana Share Of Canadian Malartic Exploration Assets
(Kitco News) - Agnico Eagle Mines Ltd. (NYSE: AEM, TSX: AEM) has agreed to purchase Yamana Gold Inc.’s (TSX: YRI; NYSE: AUY) 50% stake in the exploration assets of Canadian Malartic Corp. for $162.5 million, the companies reported late Thursday.
CMC is a company owned 50-50 by Agnico Eagle and Yamana. Assets included in the transaction are the Kirkland Lake and Hammond Reef gold projects.
"The purchase of the CMC asset portfolio enhances our longer-term development pipeline, and provides us with potential production growth post our current mine buildout in Nunavut," said Sean Boyd, Agnico Eagle's chief executive officer. "The Kirkland Lake property package enhances our current mineral reserves and offers near-term exploration upside, while the Hammond Reef project provides good optionality to a potential rise in the gold price.”
Yamana officials said the company is undertaking the transaction in order to improve its financial position, as it seeks to improve cash balances and reduce debt.
“The assets sold as part of the transaction are non-cash-flow generating and, after the company completed strategic and technical reviews, it concluded that more value would be derived in the immediate and intermediate terms through a monetization than through continued evaluation of those assets for development,” Yamana said in a prepared statement. “Another previously announced and similar strategic review that may result in a partial or whole monetization relates to Agua Rica, which is a feasibility stage copper-gold asset wholly owned by Yamana.”
Under the agreement, should Agnico Eagle sell any of the Kirkland Lake and Hammond Reef properties during the 24-month period from the date of the agreement, Yamana will participate in any increase in the net proceeds received by Agnico Eagle.
The transaction will not affect the Canadian Malartic mine and related assets, including Odyssey, East Malartic, Midway and East Amphi, which will continue to be jointly owned and operated by the companies through CMC, and the Canadian Malartic General Partnership.
The transaction is expected to close by the end of March and is subject to certain conditions, such as government and First Nations approval, the companies said.