(All amounts expressed in Canadian dollars unless otherwise noted)
Agnico-Eagle Mines Limited ("Agnico-Eagle") (NYSE: AEM)(TSX:
AEM) and Grayd Resource Corporation ("Grayd") (TSX VENTURE:
GYD)(OTCQX: GYDRF) jointly announce that they have entered into an
acquisition agreement, pursuant to which Agnico-Eagle has agreed to
offer to acquire all of the outstanding common shares of Grayd at
$2.80 per share by way of a take-over bid. The transaction is
valued at approximately $275 million on a fully-diluted basis. The
offer price of $2.80 per Grayd share represents a premium of 65.7%
to the volume weighted average price of Grayd shares on the TSX
Venture Exchange for the 20-day period ended September 16, 2011
(the last trading day prior to announcement of the
transaction).
Grayd shareholders will be entitled to receive, at their option,
for each Grayd share they own either $2.80 in cash or 0.04039 of an
Agnico-Eagle share and $0.05 in cash, in each case subject to pro
ration. The maximum amount of cash payable by Agnico-Eagle under
the offer will be equal to one third of the total consideration
(approximately $92 million). The maximum number of shares issuable
by Agnico-Eagle under the offer will be approximately 2.7 million
(based on the number of Grayd shares outstanding on September 19,
2011 on a fully-diluted basis), or approximately 1.4% of
Agnico-Eagle's outstanding shares on a fully diluted basis.
Grayd owns a 100% interest in the La India project located in
the Mulatos Gold Belt of Sonora, Mexico (approximately 70
kilometres northwest of Agnico-Eagle's Pinos Altos gold mine). The
project hosts a National Instrument 43-101 compliant measured and
indicated gold resource(1) of 26.8 million tonnes at a grade of
0.88 gram per tonne ("g/t"), and an inferred gold resource of 19.7
million tonnes at a grade of 0.80 g/t.
Grayd recently discovered the Tarachi gold porphyry prospect
located approximately 10 kilometres north of the La India project.
Both projects are located in a large package of exploration
concessions that total approximately 54,000 hectares.
"This acquisition is consistent with our long-term strategy of
building value by bringing our mine development and exploration
skills to promising early stage gold deposits and projects. The
Grayd properties will benefit from the construction and operating
experience gained at our Pinos Altos mine" said Sean Boyd,
Vice-Chairman and CEO of Agnico-Eagle. "It is expected that La
India and, further out potentially Tarachi, will contribute to the
ongoing growth in Agnico-Eagle's gold production and cash flows
reflecting the high quality of work performed by Grayd", added Mr.
Boyd.
The board of directors of Grayd, upon the unanimous
recommendation of its Special Committee, has unanimously approved
Agnico-Eagle's acquisition of Grayd pursuant to the offer and is
recommending that Grayd shareholders tender their shares to
Agnico-Eagle's offer. The recommendation of the Grayd board is
supported by a fairness opinion provided by Desjardins Securities
Inc. to the Special Committee. Grayd has engaged Canaccord Genuity
Corp. as its financial advisor and Cassels Brock & Blackwell
LLP as its legal advisor in connection with the offer. Agnico-Eagle
has engaged TD Securities Inc. as its financial advisor in
connection with the offer.
"Thanks to the hard work and dedication of our team, our Mexican
properties have advanced to the stage that it is time for us to
join with a fully funded and well established mine builder like
Agnico-Eagle for their final stage of development into gold mines"
said Marc Prefontaine, President and CEO of Grayd. "We look forward
to participating in the ongoing success of Agnico-Eagle and believe
that the exploration potential of these properties will be fully
revealed in the coming years" added Mr. Prefontaine.
All directors and officers of Grayd (representing approximately
8.0% of the outstanding Grayd shares on a fully-diluted basis) have
agreed under lock-up agreements with Agnico-Eagle, to tender their
shares to the offer, including shares issuable on the exercise of
options held.
Full details of the offer will be included in Agnico-Eagle's
take-over bid circular, which is expected to be mailed with related
documents to Grayd shareholders by early October, together with a
directors' circular which will set out the Grayd board's unanimous
recommendation that Grayd shareholders accept the offer. The offer
will be open for acceptance for a minimum of 35 days following the
date of mailing. The offer will be subject to certain customary
conditions, including there being deposited under the offer and not
withdrawn at the expiry time of the offer such number of Grayd
shares that represents at least two thirds of the outstanding Grayd
shares (calculated on a fully-diluted basis) and the absence of a
material adverse change with respect to Grayd. The acquisition
agreement provides for the payment, in certain circumstances, of a
$10 million break fee to Agnico-Eagle.
Concurrently with the signing of the acquisition agreement,
Agnico-Eagle and Grayd entered into a credit agreement, pursuant to
which Agnico-Eagle has agreed to make available to Grayd a
non-revolving term loan of $5 million, of which $600,000 has
already been advanced, on a senior unsecured basis with a maturity
date of August 13, 2012. Grayd intends to use the proceeds of the
loan to fund its ongoing exploration program on its La India
property in Sonora, Mexico. Grayd's obligations under the credit
agreement are guaranteed by Grayd's Mexican subsidiary. Interest on
the loan is payable semi-annually at a rate of 7.5% per annum,
compounded semi-annually in arrears. The credit agreement contains
customary covenants and events of default, including an event of
default on the failure of Grayd to perform, observe or comply with
any of the covenants or obligations contained in the acquisition
agreement. The loan may be repaid at any time without penalty.
Copies of the acquisition agreement, lock-up agreements, credit
agreement, take-over bid circular, directors' circular and certain
related documents will be filed with securities regulators and will
be available on SEDAR at www.sedar.com.
About Agnico-Eagle
Agnico-Eagle is a long established, Canadian headquartered gold
producer with operations located in Canada, Finland and Mexico and
exploration and development activities in Canada, Finland, Mexico
and the United States. Agnico-Eagle has full exposure to higher
gold prices consistent with its policy of no forward gold sales and
maintains a corporate strategy based on increasing shareholders'
exposure to gold on a per share basis. It has paid a cash dividend
for 29 consecutive years.
About Grayd
Grayd is a growth-oriented junior natural resource company
focused primarily on exploring and developing a large land position
in Mexico which is highly prospective for gold and silver
mineralization.
Hans Smit, P.Geo., Vice President Exploration for Grayd, is the
Qualified Person that approved the disclosure relating to
scientific and technical information of Grayd in this press
release.
U.S. Shareholders
This press release does not constitute an offer to purchase or
sell or a solicitation of an offer to sell or purchase shares of
Grayd or Agnico-Eagle made to any person in the United States of
America, its possessions and other areas subject to its
jurisdiction or to, or for the account or benefit of, a U.S. person
(as defined in Regulation S under the United States Securities Act
of 1933, as amended). The offer will be made to these persons
solely under the registration statement, offer to purchase,
prospectus and other offer documents that Agnico-Eagle expects to
file with the United States Securities and Exchange Commission (the
"SEC"). U.S. investors and securityholders are advised to read
these documents carefully when they become available, because they
will include important information regarding the offer. At that
time, investors and stockholders may obtain a free copy of the
offer to purchase, prospectus, the related letter of transmittal
and certain other offer documents from the SEC's website at
www.sec.gov. Free copies of these documents can also be obtained by
directing a request to Agnico-Eagle. YOU SHOULD READ THE OFFER TO
PURCHASE, PROSPECTUS AND OTHER OFFER DOCUMENTS CAREFULLY BEFORE
MAKING A DECISION CONCERNING THE OFFER.
Cautionary Note to Investors Concerning Estimates of Measured
and Indicated Mineral Resources
This document uses the terms "measured mineral resources" and
"indicated mineral resources". Investors are advised that while
those terms are recognized and required by Canadian regulations,
the SEC does not recognize them. Investors are cautioned not to
assume that any part or all of mineral deposits in these categories
will ever be converted into mineral reserves.
Cautionary Note to Investors Concerning Estimates of Inferred
Mineral Resources
This document uses the term "inferred mineral resources".
Investors are advised that while this term is recognized and
required by Canadian regulations, the SEC does not recognize it.
"Inferred mineral resources" have a great amount of uncertainty as
to their existence and as to their economic and legal feasibility.
It cannot be assumed that any part or all of an inferred mineral
resource will ever be upgraded to a higher category. Under Canadian
rules, estimates of inferred mineral resources may not form the
basis of feasibility or pre-feasibility studies, except in rare
cases. Investors are cautioned not to assume that any part or all
of an inferred mineral resource exists, or is economically or
legally mineable.
Forward-looking statements
The information in this press release has been prepared as at
September 19, 2011. Certain statements contained in this press
release 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,
words such as "expect", "will", "estimated", "estimates",
"anticipated", "believe", "projected" and similar expressions are
intended to identify forward-looking statements or information.
Such statements and information include without limitation
statements regarding expectations as to the anticipated timing,
completion and settlement of the transaction, the anticipated
timing of the mailing of the offer materials, the estimated mineral
resources at Grayd's properties, the ongoing growth of
Agnico-Eagle's gold production and cash flows, Grayd's use of the
proceeds borrowed under the credit agreement, and other benefits of
the transaction containing forward-looking information.
This forward-looking information is subject to numerous risks,
uncertainties and assumptions, certain of which are beyond the
control of Grayd and/or Agnico-Eagle, including risks relating to
acquisitions, including, without limitation, the parties may be
unable to complete the acquisition or completing the acquisition
may be more costly than expected because, among other reasons,
conditions to the closing of the acquisition may not be satisfied;
problems may arise with the ability to successfully integrate the
businesses of Agnico-Eagle and Grayd; the parties may be unable to
obtain regulatory approvals required for the acquisition;
Agnico-Eagle may not be able to achieve the benefits from the
acquisition or it may take longer than expected to achieve those
benefits; and the acquisition may involve unexpected costs or
unexpected liabilities. Other risks include the impact of general
economic conditions; industry conditions; volatility of metals
prices; volatility of commodity prices; currency fluctuations;
mining risks; risks associated with foreign operations;
governmental and environmental regulation; competition from other
industry participants; the lack of availability of qualified
personnel or management; stock market volatility; the ability of
Agnico-Eagle to complete or successfully integrate an announced
acquisition proposal; unexpected costs or unexpected liabilities
related to the acquisition; and failure to obtain required
regulatory approvals, including stock exchange approvals. Readers
are cautioned that the material assumptions used in the preparation
of such information, although considered reasonable at the time of
preparation, may prove to be imprecise. Actual results, performance
or achievement could differ materially from those expressed in, or
implied by, this forward-looking information and, accordingly, no
assurance can be given that any of the events anticipated by the
forward-looking information will transpire or occur, or if any of
them do so, what benefits that Grayd and/or Agnico-Eagle will
derive therefrom. Agnico-Eagle and Grayd disclaim any intention or
obligation to update or revise any forward-looking information,
whether as a result of new information, future events or otherwise
except as required by applicable securities laws. Neither the TSX
Venture Exchange nor its Regulation Services Provider (as that term
is defined in the policies of the TSX Venture Exchange) accepts any
responsibility for the adequacy or accuracy of this release. The
issuance of shares under the transaction is subject to TSX
acceptance or approval.
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(1) For additional information, see the report entitled "Preliminary
Economic Assessment, La India Gold Project, Municipio of Sahuaripa,
Sonora, Mexico", dated December 6, 2010 filed under Grayd's profile
on SEDAR. The cut-off grade used in this estimate was 0.40 grams per
tonne of gold.
Contacts: Agnico-Eagle Mines Limited Investor Relations (416)
947-1212 info@agnico-eagle.com www.agnico-eagle.com Grayd Resource
Corporation Marc A. Prefontaine President and CEO (604) 681-7446
Grayd Resource Corporation Daniel G. McIntyre Manager Corporate
Communications (604) 681-7446 www.grayd.com
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