Agnico Eagle cuts deal to acquire TMAC
Buy-out applauded as win for shareholders, Nunavut, Canada North of 60 Mining News – January 8, 2021
Last updated 1/14/2021 at 5:55pm
In what could be the best outcome of Ottawa blocking Shandong Gold Mining's bid to acquire TMAC Resources Inc., Agnico Eagle Mines Ltd. has agreed to buy out its fellow Nunavut gold miner for C$286.6 million.
TMAC Resources, which got off to a rocky start of operations at its Hope Bay gold mine in Nunavut, has been looking for a company with the financial wherewithal and mining expertise to make the northern Canada operation a success.
Under an agreement reached in May, Shandong Gold Mining was to pay C$1.75 per share to buy full ownership of TMAC.
The deal, however, met resistance from Canadian citizens and federal officials concerned that having a Chinese state-owned company owning a mine in Canada's Arctic posed a threat to national security.
After a roughly 10-week security review, Ottawa blocked the bid by Shandong Gold Mining, also known as SD Gold
While this move prevented a Chinese company from gaining ownership of Hope Bay, it also cut off funds to pay off TMAC debts and expand the Hope Bay Mine.
"Our company spent almost the entirety of 2020 under the uncertainty of a strategic review process and the Canadian government review of the sale to Shandong, with an impending debt maturity, compounded by the anxiety of the global pandemic," said TMAC Resources President and CEO Jason Neal.
This anxiety was laid to rest with a superior bid from Agnico Eagle, a company that already operates two gold mines in Nunavut and has earned an exceptional reputation for its environmental, social, and corporate governance.
"The acquisition being completed by Agnico Eagle is a great outcome for all stakeholders," said Neal. "Agnico Eagle is one of the strongest gold producers internationally, a Canadian champion and has been operating in Nunavut for more than a decade with a great track record with communities, employees and the environment."
Under a Jan. 4 agreement, the shareholder-approved deal and terms offered to Shandong Gold Mining is to be assigned to Agnico Eagle. In addition, Agnico is sweetening the offer by retiring TMAC's outstanding debt, deferred interest, and fees. This adds a C45 cent per share premium to the original C$1.75 per share original offer.
The deal with Agnico Eagle was applauded by Resource Capital Fund and Newmont Corp., which own roughly 52% of TMAC's shares.
"The sale of TMAC to Agnico Eagle is an excellent outcome for TMAC's shareholders, employees and local communities," said Newmont President and CEO Tom Palmer. "Agnico Eagle's extensive experience in the Arctic, coupled with their clear commitment to the highest environmental, social and governance practices make them uniquely qualified to lead and realize the fullest potential of the Hope Bay gold district."
The deal, which will need court approval, is expected to be finalized by Feb. 8.
Agnico Eagle is excited to get started at its fourth gold mine in Nunavut.
"We are very pleased to have the opportunity to bring our extensive northern operational and community experience to the Hope Bay Mine and the Kitikmeot Region of Nunavut," said Agnico Eagle Mines CEO Sean Boyd. "Together with the TMAC team and our Nunavut partners, we look forward to advancing exploration and expansion initiatives to realize the full potential of the mine and its large unexplored land package."