(All amounts expressed in U.S. dollars unless otherwise noted)
C$8.15 per share offer provides superior shareholder value
TORONTO, April 16, 2014 /PRNewswire/ - Agnico Eagle Mines Limited (NYSE:AEM, TSX:AEM) ("Agnico Eagle"), Yamana Gold Inc. (TSX:YRI, NYSE:AUY) ("Yamana") and
Osisko Mining Corporation (TSX:OSK; Deutsche Boerse:EWX) ("Osisko") are
pleased to announce that they have entered into an agreement ("the
Agreement") pursuant to which Agnico Eagle and Yamana will jointly
acquire 100% of Osisko's issued and outstanding common shares for total
consideration of approximately C$3.9 billion, or C$8.15 per share. The
total offer consists of approximately C$1.0 billion in cash,
approximately C$2.33 billion in Agnico Eagle and Yamana shares, and
shares of a new company ("Spinco") with an implied value of
approximately C$575 million.
The offer represents approximately an 11% premium to the implied value
of the current Goldcorp Inc. ("Goldcorp") hostile bid. Agnico Eagle,
Yamana, and Osisko will host a joint conference call today at 10:00
a.m. EDT to discuss the transaction.
Terms of the Agreement
Under the Agreement, Agnico Eagle and Yamana will form a joint
acquisition entity (with each company owning 50%) which will acquire by
way of a plan of arrangement all of the outstanding common shares of
Osisko. Upon closing of the transaction, Agnico Eagle and Yamana will
each own 50% of Osisko, and will form a joint committee to operate the
Canadian Malartic Mine in Québec. The partners will also jointly
explore and potentially develop the Kirkland Lake assets, and continue
the exploration at the Hammond Reef, Pandora, Wood-Pandora properties.
Upon implementation of the Agreement, each outstanding common share of
Osisko will be exchanged for:
(i)
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C$2.09 in cash;
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(ii)
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0.07264 of an Agnico Eagle common share (a value of C$2.43 based on the
closing price of C$33.45 for Agnico Eagle shares on the Toronto Stock
Exchange as of April 15, 2014);
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(iii)
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0.26471 of a Yamana common share (a value of C$2.43 based on the closing
price of C$9.18 for Yamana shares on the Toronto Stock Exchange as of
April 15, 2014); and
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(iv)
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one common share of Spinco with a value of C$1.20.
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Pursuant to the plan of arrangement, certain assets of Osisko will be
transferred to Spinco, the shares of which will be distributed to
Osisko shareholders as part of the consideration. The following will
be transferred to Spinco:
(i)
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a 5% net smelter royalty ("NSR") on the Canadian Malartic Mine;
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(ii)
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C$155 million cash;
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(iii)
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a 2% NSR on the Kirkland Lake assets, the Hammond Reef project, and the
Pandora and Wood-Pandora properties;
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(iv)
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all assets and liabilities of Osisko in its Guerrero camp; and
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(v)
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other investments.
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The total value of the transaction is C$3.9 billion, or C$8.15 per
common share of Osisko on a fully diluted basis. Following the
completion of the transaction, Osisko shareholders will own
approximately 16.7% of Agnico Eagle and approximately 14.4% of Yamana.
Agnico Eagle will finance its share of the cash consideration
(approximately C$501 million) from its existing US$1.2 billion credit
facility.
Value to Osisko Shareholders
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Values Osisko at C$3.9 billion or C$8.15 per share - a premium to the
current implied value of Goldcorp's revised bid for Osisko and Osisko's
current trading levels
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In addition to significant continued participation in the Canadian
Malartic Mine, shareholders gain exposure to two of the leading
mid-tier North American gold producers
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Participation in Spinco, which will hold a portfolio of exploration
assets with the ability to self-finance through its existing cash
holdings and a 5% NSR on the Canadian Malartic mine
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Potential additional upside from a 2% NSR on the above mentioned
exploration properties in Ontario and Québec, and Osisko's 100% owned
land package in Guerrero, Mexico
Osisko's Board of Directors has unanimously determined that the
Agreement is in the best interests of Osisko and its shareholders and
will recommend that Osisko shareholders vote in favour of the
Agreement. Shareholders, including the directors and senior officers of
Osisko, holding in aggregate approximately 4.5% of the issued and
outstanding common shares of Osisko, have entered into voting
agreements with Agnico Eagle and Yamana, pursuant to which they have
agreed to vote their shares in favor of the Agreement.
Sean Roosen
, President and CEO of Osisko stated: "Ten years ago we
embarked on a journey to find a gold deposit. It was a plan that grew
into the successful and highly profitable world class mine that is now
Canadian Malartic. From the beginning, we have never strayed from our
objective of building shareholder value. With the announcement today
of the combined bid by Yamana and Agnico Eagle, I believe we have
delivered shareholders the superior value option to the hostile attempt
to acquire our Company. The new Spinco will be well funded with C$155
million in cash, strong participation in the future cash flow from the
Canadian Malartic camp through our 5% NSR, potential future benefits
from the balance of Osisko's Canadian exploration portfolio through an
overall 2% NSR, and a 100% ownership of Osisko's significant
exploration project in Guerrero. The new Spinco will be a company with
regular and strong cash flow, strong future potential for increasing
cash flow, and tremendous upside exploration potential."
Strategic Rationale for Agnico Eagle
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Accretive on per share metrics - Net asset value, operating cash flow, free cash flow, production,
reserves, and resources. The transaction is also expected to improve
Agnico Eagle's total cash cost and all-in sustaining cost profiles
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Builds on Agnico Eagle's northern business platform - Canadian Malartic is the largest producing gold mine in Canada with the
ability to produce an average of approximately 600,000 gold ounces per
year for 14 years and is a great strategic fit with Agnico Eagle's
skills and operating assets in the Abitibi
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Manageable debt levels and minimal share dilution - The added debt is very manageable in the context of a larger business
generating stronger free cash flow. With Osisko shareholders holding a
16.7% interest in Agnico Eagle post the transaction, the dilution is in
line with many of the company's previous acquisitions
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Simple, low risk acquisition - Acquisition of an operating mine in Agnico Eagle's core Québec
region. The Canadian Malartic Mine is an asset without permitting,
construction capital or start up risk
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Maintains strategy of operating in supportive regions with low political
risk - The addition of a fourth operating mine in Québec and a large
prospective exploration portfolio in Ontario further enhances Agnico
Eagle's already low level of political risk
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Enhances and adds flexibility to Agnico Eagle's project pipeline - The advanced Kirkland Lake project further enhances Agnico Eagle's
development portfolio
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Potential synergies with existing Québec operations - Agnico Eagle expects synergies with its other Abitibi operations and
there is potential to further optimize the Canadian Malartic Mine plan.
Sean Boyd
, President and Chief Executive Officer of Agnico Eagle stated:
"Agnico Eagle has approximately 50 years of operating history in
Québec, and over that time the company has continued to expand its
mining presence in a measured and systematic way. This transaction
further enhances our Québec operating platform through the addition of
a fourth producing mine. With this acquisition, Agnico Eagle will
become Québec's largest gold producer, which demonstrates our
commitment to Québec and various stakeholders in the Province.
"Traditionally, Agnico Eagle has focused on acquisitions with minimal
dilution to shareholders. With Osisko shareholders holding a 16.7%
interest in Agnico Eagle after the transaction, we believe that the
dilution is in line with many of the Company's previous acquisitions.
However, this transaction comes without permitting, construction
capital, or start-up risk, and is immediately accretive to Agnico Eagle
on a number of key per share metrics. In addition, the transaction is
expected to lower our total cash costs and all-in sustaining costs.
"On the back of record first quarter gold production (366,421 ounces),
the Company has made repayments of US$130 million on its revolving
credit facility since the beginning of the year, which further enhances
our financial flexibility and the ability to fund our bid.
"We look forward to working with Yamana as a partner at the Canadian
Malartic Mine, and at the exploration properties. Yamana's expertise at
their large open pit Chapada gold copper mine in Brazil should
complement our operating experience at Meadowbank and in the Abitibi
region."
Strategic Rationale for Yamana
Yamana is a proven operator with the stated objectives of operating in
mining friendly jurisdictions in the Americas with a balanced approach
to production growth, cost containment and margin preservation to
maximize and increase cash flow. This partnership with Agnico Eagle
provides Yamana with significant production growth at costs consistent
with its existing cost structure, enhanced generation of cash flow and
an expanded future project pipeline. It will also provide entry into
one of the world's best mining jurisdictions without the level of risk
generally associated with new locales given the strong operational
management at Canadian Malartic and Agnico Eagle's decades-long
experience in the region.
Peter Marrone
, Chairman and Chief Executive Officer of Yamana commented:
"At Yamana, we focus on both top-line and bottom-line growth as we
strive to deliver value to shareholders, and with this acquisition we
expect to deliver exceptional value to our shareholders. This
acquisition provides value across all key per share metrics. The
Canadian Malartic mine is a world class asset that will become a
cornerstone in our portfolio alongside Chapada and El Peñón. We are
also pleased with this relatively low risk entry into Québec, a
province with an established pedigree of mining that complements our
existing presence in the Americas. Consistent with our disciplined and
balanced approach to growth, we are able to acquire 50% of the Canadian
Malartic mine and the other Canadian development and exploration
properties of Osisko while maintaining our strong balance sheet and
financial flexibility.
"We are delighted with our improved structure and offer. With Agnico
Eagle as our partner, the operational management at Canadian Malartic
and as we open our own operational office in Québec, these benefits
will be further enhanced with our collective experience with large open
pit conventional mining with their jurisdictional expertise. We are
pleased with our entry into Québec and we look forward to increasing
our profile in this mining friendly jurisdiction."
The transaction is subject to the approval of Osisko shareholders by a
two thirds vote at a meeting which is expected to be held later in May
2014. The approval of the shareholders of Agnico Eagle and Yamana is
not required. The Agreement is expected to close by early June 2014,
following receipt of all shareholder and court, regulatory and exchange
approvals.
Pursuant to the terms of the Agreement, Osisko is subject to customary
non-solicitation covenants. In the event a superior proposal is made to
Osisko, Agnico Eagle and Yamana have a 5 business day right to match
such proposal, and under certain circumstances in the event Osisko's
board of directors changes its recommendation or terminates the
Agreement, Osisko has agreed to pay a termination fee of C$195 million
to Agnico Eagle and Yamana, shared equally. In certain other
circumstances where the transaction is not completed, Osisko has agreed
to reimburse Agnico Eagle's and Yamana's expenses in the amount of C$10
million each for their costs.
Osisko's Board of Directors has determined that the offer by Agnico
Eagle and Yamana is superior to the proposal made by Yamana on April 2,
2014 and Yamana and Osisko have agreed to terminate their agreement.
Yamana has agreed to waive its break fee under that agreement.
Agnico Eagle has engaged TD Securities Inc. and Bank of America Merrill
Lynch as its financial advisors and Davies Ward Phillips & Vineberg LLP
as its legal advisor in connection with the Agreement.
Yamana has engaged Canaccord Genuity Corp. as its financial advisor and
Norton Rose Fulbright Canada LLP and Paul, Weiss, Rifkind, Wharton &
Garrison LLP as its legal advisors in connection with the Agreement.
Yamana has also engaged National Bank Financial Markets to provide an
opinion as to the fairness of the consideration payable by Yamana, from
a financial point of view, to Yamana.
Osisko has engaged BMO Capital Markets and Maxit Capital LP as its
financial advisors and Bennett Jones LLP and Stikeman Elliott LLP as
its legal advisors in connection with the Agreement.
Conference Call Information
Agnico Eagle, Yamana, and Osisko will host a conference call on
Wednesday April 16, 2014 at 10:00 a.m. EDT, where senior management of
each company will discuss the details of the transaction.
Toll Free (North America):
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1-800-769-8320
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Toronto Local and International:
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416-340-8527
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Webcast:
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www.agnicoeagle.com
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Conference Call REPLAY:
Toll Free (North America):
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1-800-408-3053
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Passcode 6977252
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Toronto Local and International:
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905-694-9451
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Passcode 6977252
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The conference call replay will be available from 1:00 p.m. EDT on April
16, 2014 until 11:59 p.m. EDT on April 30, 2014.
The webcast along with presentation slides will be archived for 180 days
on the website. For further information on the conference call or
webcast, please contact:
Investor Relations
Agnico Eagle Mines Limited
145 King Street East, Suite 400
Toronto, Ontario, M5C 2Y7
Telephone: 416-947-1212
Fax: 416-367-4681
About Agnico Eagle
Agnico Eagle is a senior Canadian gold mining company that has produced
precious metals since 1957. Its seven mines are located in Canada,
Finland and Mexico, with exploration and development activities in each
of these regions as well as in the United States. The Company and its
shareholders have full exposure to gold prices due to its long-standing
policy of no forward gold sales. Agnico Eagle has declared a cash
dividend every year since 1983.
About Yamana
Yamana is a Canadian-based gold producer with significant gold
production, gold development stage properties, exploration properties,
and land positions throughout the Americas including Brazil, Argentina,
Chile and Mexico. Yamana plans to continue to build on this base
through existing operating mine expansions, throughput increases,
development of new mines, the advancement of its exploration properties
and by targeting other gold consolidation opportunities with a primary
focus in the Americas.
About Osisko
Osisko Mining Corporation operates the Canadian
Malartic Gold Mine
in
Malartic, Québec and is pursuing exploration on a number of properties,
notably in Québec, Ontario and Mexico.
Forward looking statements
The information in this document has been prepared as at April 16, 2014.
Certain statements contained in this document constitute
"forward-looking statements" within the meaning of the United States
Private Securities Litigation Reform Act of 1995 and forward looking
information under the provisions of Canadian provincial securities
laws. When used in this document, the words "anticipate", "expect",
"estimate", "forecast", "will", "planned", and similar expressions are
intended to identify forward-looking statements or information.
Such statements include without limitation: statements regarding the
timing and closing of the transactions contemplated by the Agreement
(the "Transaction"), statements regarding synergies resulting from the
Transaction, statements regarding the effect of the Transaction on
Agnico Eagle's net asset value, operating cash flow, free cash flow,
production, reserves, resources, total cash cost, all-in sustaining
costs, and debt levels, statements regarding timing and amounts of
capital expenditures and other assumptions; estimates of future
reserves, resources, mineral production, optimization efforts and
sales; estimates of mine life; estimates of future internal rates of
return, mining costs, total cash costs, minesite costs, all-in
sustaining costs and other expenses; estimates of future capital
expenditures and other cash needs, and expectations as to the funding
thereof; statements and information as to the projected development of
certain ore deposits, including estimates of exploration, development
and production and other capital costs, and estimates of the timing of
such exploration, development and production or decisions with respect
to such exploration, development and production; estimates of reserves
and resources, and statements and information regarding anticipated
future exploration; the anticipated timing of events with respect to
the Company's mine sites and statements and information regarding the
sufficiency of the Company's cash resources. Such statements and
information reflect the Company's views as at the date of this document
and are subject to certain risks, uncertainties and assumptions, and
undue reliance should not be placed on such statements and information.
Many factors, known and unknown could cause the actual results to be
materially different from those expressed or implied by such forward
looking statements and information. Such risks include, but are not
limited to: the volatility of prices of gold and other metals;
uncertainty of mineral reserves, mineral resources, mineral grades and
mineral recovery estimates; uncertainty of future production, capital
expenditures, and other costs; currency fluctuations; financing of
additional capital requirements; cost of exploration and development
programs; mining risks; community protests; risks associated with
foreign operations; governmental and environmental regulation; the
volatility of the Company's stock price; and risks associated with the
Company's byproduct metal derivative strategies. For a more detailed
discussion of such risks and other factors that may affect the
Company's ability to achieve the expectations set forth in the
forward-looking statements contained in this document, see the
Company's Annual Information Form for the year ended December 31, 2013
filed on SEDAR at www.sedar.com and included in the Company's Form 40-F for the year ended December 31,
2013 filed on EDGAR at www.sec.gov, as well as the Company's other filings with the Canadian securities
regulators and the U.S. Securities and Exchange Commission. The Company
does not intend, and does not assume any obligation, to update these
forward-looking statements and information. For a detailed breakdown of
the Company's reserve and resource position see the Company's Annual
Information Form or Form 40-F.
Note Regarding the Use of Non-GAAP Financial Measures
This document presents estimates of future "total cash cost per ounce",
"minesite cost per tonne", and "all-in sustaining cost" that are not
recognized measures under United States generally accepted accounting
principles ("US GAAP"). This data may not be comparable to data
presented by other gold producers. These future estimates are based
upon the total cash costs per ounce and minesite costs per tonne that
the Company expects to incur to mine gold at the applicable sites and
do not include production costs attributable to accretion expense and
other asset retirement costs, which will vary over time as each project
is developed and mined. It is therefore not practicable to reconcile
these forward-looking non-GAAP financial measures to the most
comparable GAAP measure. A reconciliation of the Company's total cash
cost per ounce, all-in sustaining cost per ounce, and minesite cost per
tonne to the most comparable financial measures calculated and
presented in accordance with US GAAP for the Company's historical
results of operations is set forth in the Company's annual management's
discussion and analysis ("MD&A") for the year ended December 31, 2013
available on SEDAR at www.sedar.com and included in the Company's Form 40-F available on EDGAR at www.sec.gov, as well as the Company's other filings with the Canadian securities
regulators and the SEC.
Note Regarding Production Guidance
The gold production guidance is based on the Company's mineral reserves
but includes contingencies and assumes metal prices and foreign
exchange rates that are different from those used in the reserve
estimates. These factors and others mean that the gold production
guidance presented in this disclosure does not reconcile exactly with
the production models used to support these mineral reserves.
SOURCE Agnico Eagle Mines Limited