Agnico buying 9% of Queenston

Agnico-Eagle Mines (AEM-T, AEM-N) is signaling its faith in the Kirkland Lake region of northeastern Ontario by investing in Queenston Mining (QMI-T).

Agnico is taking nearly a 9% stake in the junior by buying 6.6 million Queenston units at a price of $5.30 per unit which will add $35 million dollars to Queenston’s coffer bringing its cash assets up to $70 million.

On a fully diluted basis, Agnico’s interest would move up to 11.47%.

Each unit is made up of one common share and a half warrant with a strike price of $6.45 over the next 36 months.

The investment is being made by way of a non-brokered private placement that was approved by both boards.

The two companies are also entering into a technical services agreement that gives Queenston access to Agnico-Eagle’s geological and engineering mining team.

Part of Queenston’s attractiveness to Agnico, no doubt, is the fact that the company has the largest land holding in a historically significant gold producing region.

Queenston’s claims cover 200 sq. km and it is currently focused on five, wholly owned, gold deposits in the area. It plans to build a central mill for the sites in the Gauthier Township.

All five of the deposits have a measured and indicated resources estimates with Upper Beaver having 1.3 million tonnes grading 8.5 grams gold for 375,000 oz.; McBean has 705,300 tonnes grading 4.7 grams gold for 105,000 oz.; Anoki has 727,700 tonnes grading 4.8 grams gold for 111,200 oz. of gold, and the SMC project has 44,000 tonnes grading 47 grams gold for 66,000 oz.

“This strategic investment is a strong indication of the quality and potential of Queenston’s properties in the Kirkland Lake camp.” Sean Boyd, Agnico’s chief executive said in a statement.” This investment provides us exposure to a world class gold camp and is consistent with our strategy of investing in promising gold development opportunities.”

For its part Queenston heralded Agnico’s underground and open pit mining experience and said such assistance will help the company advance its projects towards the development stage.