Agnico Eagle Issued Warrants In A Loan Deal With Orla Mining

Agnico Eagle Mines Limited (NYSE:AEM) was issued 10,400,000 common share purchase warrants (or “2026 warrants”) of Orla Mining Ltd on Dec 18, 2019. The warrants were issued in connection with the financing commitments provided by Agnico Eagle under an earlier announced loan agreement between Orla Mining and the company.

Each issued 2026 warrants entitle Agnico Eagle to purchase one common share of Orla Mining at a price of C$3 prior to Dec 18, 2026. Previously, the company owned 17,613,835 common shares of Orla Mining along with 870,250 common share purchase warrants. These entitle holders to purchase one common share of Orla Mining at a price of C$2.35 prior to Feb 15, 2021. Assuming that the 2021 warrants held by Agnico Eagle were exercised, this represents around 9.89% of the issued and outstanding common shares of Orla Mining on a partly-diluted basis and 9.47% of the issued and outstanding common shares on a non-diluted basis.

Post this development, Agnico Eagle owned 17,613,835 common shares of Orla Mining along with 870,250 common share 2021 warrants and 10,400,000 common share 2026 warrants. Assuming the 2021 and 2026 warrants held by Agnico Eagle is exercised, this will represent around 14.64% of the issued and outstanding common shares of Orla Mining on a partially-diluted basis and 9.47% of the issued and outstanding common shares on a non-diluted basis.

Agnico Eagle and Orla Mining are parties to an Amended and Restated Investor Rights Agreement (also known as the Investor Rights Agreement) dated Dec 17, 2019. Subject to the terms and conditions of the Investor Rights Agreement, Agnico Eagle was granted certain rights. This includes the right to contribute in certain equity financings undertaken by Orla Mining as well as Agnico Eagle’s right to nominate a member to Orla Mining's board of directors.

The loan agreement also provides some restrictions on Agnico Eagle's ability to transfer the 2026 warrants until the loan commitments provided by the company have been satisfied. Notably, Agnico Eagle purchased the common shares of Orla Mining along with the 2021 and 2026 warrants for investment purpose.

Agnico Eagle’s shares have surged 49.4% in the past year compared with the industry’s 54.8% rally.

In October 2019, Agnico Eagle revised its production guidance for full-year 2019.

Gold production for 2019 is now projected in the band of 1.77-1.78 million ounces, up from 1.75 million ounces expected earlier. The projection includes pre-commercial production from Meliadine and Amaruq.

The company continues to expect total cash costs per ounce between $620 and $670. All-in sustaining costs are expected in the range of $875-$925 per ounce.

Zacks Rank & Key Picks

Agnico Eagle currently carries a Zacks Rank #3 (Hold).

Some better-ranked stocks in the basic materials space are Daqo New Energy Corp (NYSE:DQ) , Pan American Silver Corp (NASDAQ:PAAS) and Commercial Metals Company (NYSE:CMC) , each currently sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Daqo New Energy has projected earnings growth rate of 294.7% for 2020. The company’s shares have skyrocketed 102.4% over a year.

Pan American Silver has an estimated earnings growth rate of 38.1% for 2020. Its shares have returned 48.7% in the past year.

Commercial Metals has an expected earnings growth rate of 15.4% for fiscal 2020. The company’s shares have gained 44.2% in the past year.

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