Agnico Eagle Mines Limited (NYSE:AEM) said that it has entered into a share purchase deal with G4G Capital Corp. which is proposed to be renamed White Gold Corp. (the "Issuer"). Under the agreement, Agnico Eagle has agreed to purchase from the issuer on a private placement basis such number of common shares of the issuer equal to 19.93% of the total issued and outstanding common shares on a non-diluted basis as at the transaction closure. The company will pay $1.20 per common shares.
Agnico Eagle is purchasing the common shares for investment purposes. The transaction is expected to close on or about Dec 13, 2016 and is subject to certain conditions.
Upon closing of the transaction, Agnico Eagle and the issuer will enter into an investor rights agreement following which Agnico Eagle will have the right to participate in certain equity financings by the issuer to maintain its 19.93% interest in the issuer, and the right to nominate one person to the board of the issuer.
Per the investor rights agreement, the issuer will have the right to designate a purchaser in the event that Agnico Eagle wishes to sell more than 5% of its common shares. Under the investor rights agreement, Agnico Eagle will be subject to a 2-year standstill which will restrict Agnico Eagle from taking certain actions, including acquiring more than 19.99% of the issued and outstanding common shares, subject to certain exceptions.
The issuer has an option to acquire 12,301 claims across 21 properties covering about 249,000 hectares and representing roughly 30% of the White Gold District in the Yukon Territory from Wildwood Exploration Inc. and Shawn Ryan, the Chief Technical Advisor of the issuer.
Agnico Eagle’s share prices have fallen 26.78% while the Zacks categorized mining industry has declined 0.47% in the past three months. Agnico-Eagle is exposed to a volatile gold pricing environment. The recent pullback in gold prices poses a concern for the company. Moreover, Agnico-Eagle faces currency exchange translation risk. Further, any potential delay associated with the company's key development projects may jeopardize its future production.
Zacks Rank & Key Picks
Agnico Eagle currently carries a Zacks Rank #4 (Sell).
Some better-ranked companies in the basic materials space include Denison Mines Corp. (NYSE:DNN) , BHP Billiton (LON:BLT) Limited (NYSE:BHP) and Fission Uranium Corp. (OTC:FCUUF) , all carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Denison Mines has an expected earnings growth rate of 71.4% for the current year.
BHP Billiton has an expected earnings growth of 147.8% for the current year.
Fission Uranium has an expected earnings growth rate of 25% for the current year.
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AGNICO EAGLE (AEM): Free Stock Analysis Report
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