Agnico-Eagle Mines Ltd., the fifth-largest Canadian gold producer by market value, agreed to buy Grayd Resource Corp. for about C$255.3 million ($257.8 million) in cash and stock, gaining more mines in Mexico.
Grayd investors can choose between receiving C$2.80 or 0.04039 of an Agnico-Eagle share plus 5 cents in cash for each share they own, Toronto-based Agnico-Eagle said in a statement today. The bid is 68 percent more than Vancouver-based Grayd’s average share price in the 20 trading days through Sept. 16, according to Bloomberg data.
Grayd’s La India project is located in the Mulatos Gold Belt of Sonora, Mexico, and is about 70 kilometers (44 miles) northwest of Agnico-Eagle’s Pinos Altos gold mine, according to the statement. Grayd’s Tarachi gold prospect is located about 10 kilometers north of La India.
Agnico-Eagle will pay a maximum of about C$92 million in cash for Grayd, it said. The deal value was calculated based on the number of Grayd shares outstanding, according to Bloomberg data.
Grayd rose 80 cents, or 41 percent, to C$2.75 as of 3:59 p.m. on the TSX Venture Exchange.
Agnico-Eagle also agreed to issue Grayd a C$5 million loan to fund exploration work at La India. Agnico-Eagle can receive a C$10 million breakup fee if the deal fails under certain circumstances.
TD Securities Inc. is Agnico-Eagle’s financial adviser on the takeover. Canaccord Genuity Corp. is Grayd’s financial adviser and Cassels Brock & Blackwell LLP is its legal adviser.
The four largest Canadian gold producers ranked by market value are Barrick Gold Corp., Goldcorp Inc., Kinross Gold Corp. and Yamana Gold Inc.