Agnico Eagle takes 13% stake in ATEX Resources

Agnico Eagle Mines (TSX: AEM; NYSE: AEM) has taken a 13% stake in copper-gold explorer ATEX Resources (TSXV: ATX) with an investment totalling $55 million, which the latter will use to advance its flagship Valeriano project in Chile’s Atacama region. ATEX shares rose.

Under a private placement agreement announced on Friday, Agnico will purchase approximately 33.9 million units of ATEX at $1.63 per unit, representing a 15% premium over ATEX’s stock price from a week ago and 12.4% over its previous day’s closing price. Upon the deal’s closing, Agnico is to become one of ATEX’s largest shareholders.

“This transaction results in ATEX being well capitalized through 2025 to execute on our future drill programs and to continue defining this deposit while also continuing to de-risk and conduct engineering studies,” ATEX CEO Ben Pullinger said in a release.

By mid-day in Toronto, ATEX shares gained 10.3% $1.60 apiece, having touched a 52-week high of $1.66 earlier in the morning. The company has a market capitalization of $332 million.

The Agnico investment will support ATEX’s exploration activities at Valeriano, which covers about 61.3 sq. km and is host to a large copper-gold porphyry deposit, below a near-surface oxidized epithermal gold deposit that extends from surface to a depth of 100 metres.

Since 2021, ATEX has completed multiple phases of drilling to test the mineralization at Valeriano, beginning with the gold oxide deposit in the initial phase, then extending to the porphyry system.

Last year, it released a resource estimate totalling 1.4 billion inferred tonnes grading 0.49% copper and 0.21 gram gold per tonne. The porphyry deposit makes up most of this resource — 1.4 billion tonnes at 0.5% copper and 0.2 gram gold — and contains a higher-grade core totalling 200 million tonnes at 0.62% copper and 0.29 gram gold.

In addition to the private placement, the company also announced that it will repay the entire outstanding balance on its credit facility totalling US$15 million through the issuance of equity. A total of 7.9 million units at the same price of the offering ($1.63) and 5.5 million shares priced at $1.42 each will be issued to its lenders (Firelight Investments, Beedie Capital and Trinity Capital Partners).

ATEX has also arranged a private placement with recently appointed board member Rick McCreary, who will purchase $500,000 worth of units, also at the same price of the private placement.