Agnico-Eagle Mines (aem-t, aem-n) has made a friendly $275-million takeover bid for Grayd Resource (gyd-v) and its two Mexican gold projects.
Agnico hopes to buy all of Grayd’s outstanding shares for $2.80 apiece in cash and shares. This represents a 65.7% premium to the junior’s 20-day volume-weighted average price, ending Sept. 16.
Grayd’s shareholders have an option of either receiving $2.80 in cash or .04039 of an Agnico-Eagle share and 5¢ in cash for each share held. Under the offer, Agnico has placed a limit on the amount of cash and shares it will dish out. That maximum is $92 million for cash and 2.7 million for shares or about 1.4% of its fully diluted shares.
The junior’s wholly-owned La India project is in the Mulatos gold belt of Sonora, some 70 km northwest of Agnico’s Pinos Altos gold mine.
Based on a cutoff grade of 0.4 gram gold, La India has a National Instrument 43-101 compliant measured and indicated resource of 760,000 oz. from 26.8 million tonnes grading 0.88 gram gold per tonne, and an inferred resource of 506,000 oz. from 19.7 million tonnes at 0.80 gram gold.
As part of the offer, Agnico will provide Grayd a $5-million loan to continue its exploration program on the project.
About 10 km north of La India, Grayd recently discovered the Tarachi gold porphyry prospect. Both projects are apart of its large land position, covering 540 sq. km.
The junior also has the polymetallic Delta project in Alaska, which is a joint-venture with the Hunter Dickinson group.
Agnico-Eagle’s vice-chairman and CEO Sean Boyd said in a press release that the Grayd acquisition fits the company’s long-term strategy of building value. “It is expected that La India and, further out potentially Tarachi, will contribute to the ongoing growth in Agnico-Eagles’s gold production and cash flows reflecting the high quality of work performed by Grayd.”
The junior’s board couldn’t have been happier by the news. It’s unanimously supporting the transaction and asking its shareholders to tender their shares to the offer.
All of its directors and officers, representing 8% of Grayd’s outstanding shares on a fully diluted basis, have agreed to lock-up their shares.
Agnico expects to mail out its takeover bid circular and other relevant information to Grayd’s shareholders by early October. Following that, the offer will be on the table for a minimum of 35 days.
If Grayd calls off the agreement it will need to pay Agnico a $10-million break fee.
The takeover news sent Grayd’s shares up 41% to $2.75 on 16.7 million shares traded.
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