(All amounts expressed in U.S. dollars unless otherwise noted)
C$8.15 per share offer provides superior shareholder value
TORONTO, April 16, 2014 /PRNewswire/ - Agnico Eagle Mines Limited (NYSE:AEM, TSX:AEM) ("Agnico Eagle"), Yamana Gold Inc. (TSX:YRI, NYSE:AUY) ("Yamana") and Osisko Mining Corporation (TSX:OSK; Deutsche Boerse:EWX) ("Osisko") are pleased to announce that they have entered into an agreement ("the Agreement") pursuant to which Agnico Eagle and Yamana will jointly acquire 100% of Osisko's issued and outstanding common shares for total consideration of approximately C$3.9 billion, or C$8.15 per share. The total offer consists of approximately C$1.0 billion in cash, approximately C$2.33 billion in Agnico Eagle and Yamana shares, and shares of a new company ("Spinco") with an implied value of approximately C$575 million.
The offer represents approximately an 11% premium to the implied value of the current Goldcorp Inc. ("Goldcorp") hostile bid. Agnico Eagle, Yamana, and Osisko will host a joint conference call today at 10:00 a.m. EDT to discuss the transaction.
Terms of the Agreement
Under the Agreement, Agnico Eagle and Yamana will form a joint acquisition entity (with each company owning 50%) which will acquire by way of a plan of arrangement all of the outstanding common shares of Osisko. Upon closing of the transaction, Agnico Eagle and Yamana will each own 50% of Osisko, and will form a joint committee to operate the Canadian Malartic Mine in Qubec. The partners will also jointly explore and potentially develop the Kirkland Lake assets, and continue the exploration at the Hammond Reef, Pandora, Wood-Pandora properties.
Upon implementation of the Agreement, each outstanding common share of Osisko will be exchanged for:
| (i) | C$2.09 in cash; |
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| (ii) | 0.07264 of an Agnico Eagle common share (a value of C$2.43 based on the closing price of C$33.45 for Agnico Eagle shares on the Toronto Stock Exchange as of April 15, 2014); |
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| (iii) | 0.26471 of a Yamana common share (a value of C$2.43 based on the closing price of C$9.18 for Yamana shares on the Toronto Stock Exchange as of April 15, 2014); and |
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| (iv) | one common share of Spinco with a value of C$1.20. |
Pursuant to the plan of arrangement, certain assets of Osisko will be transferred to Spinco, the shares of which will be distributed to Osisko shareholders as part of the consideration. The following will be transferred to Spinco:
| (i) | a 5% net smelter royalty ("NSR") on the Canadian Malartic Mine; |
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| (ii) | C$155 million cash; |
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| (iii) | a 2% NSR on the Kirkland Lake assets, the Hammond Reef project, and the Pandora and Wood-Pandora properties; |
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| (iv) | all assets and liabilities of Osisko in its Guerrero camp; and |
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| (v) | other investments. |
The total value of the transaction is C$3.9 billion, or C$8.15 per common share of Osisko on a fully diluted basis. Following the completion of the transaction, Osisko shareholders will own approximately 16.7% of Agnico Eagle and approximately 14.4% of Yamana. Agnico Eagle will finance its share of the cash consideration (approximately C$501 million) from its existing US$1.2 billion credit facility.
Value to Osisko Shareholders
- Values Osisko at C$3.9 billion or C$8.15 per share - a premium to the current implied value of Goldcorp's revised bid for Osisko and Osisko's current trading levels
- In addition to significant continued participation in the Canadian Malartic Mine, shareholders gain exposure to two of the leading mid-tier North American gold producers
- Participation in Spinco, which will hold a portfolio of exploration assets with the ability to self-finance through its existing cash holdings and a 5% NSR on the Canadian Malartic mine
- Potential additional upside from a 2% NSR on the above mentioned exploration properties in Ontario and Qubec, and Osisko's 100% owned land package in Guerrero, Mexico
Osisko's Board of Directors has unanimously determined that the Agreement is in the best interests of Osisko and its shareholders and will recommend that Osisko shareholders vote in favour of the Agreement. Shareholders, including the directors and senior officers of Osisko, holding in aggregate approximately 4.5% of the issued and outstanding common shares of Osisko, have entered into voting agreements with Agnico Eagle and Yamana, pursuant to which they have agreed to vote their shares in favor of the Agreement.
Sean Roosen , President and CEO of Osisko stated: "Ten years ago we embarked on a journey to find a gold deposit. It was a plan that grew into the successful and highly profitable world class mine that is now Canadian Malartic. From the beginning, we have never strayed from our objective of building shareholder value. With the announcement today of the combined bid by Yamana and Agnico Eagle, I believe we have delivered shareholders the superior value option to the hostile attempt to acquire our Company. The new Spinco will be well funded with C$155 million in cash, strong participation in the future cash flow from the Canadian Malartic camp through our 5% NSR, potential future benefits from the balance of Osisko's Canadian exploration portfolio through an overall 2% NSR, and a 100% ownership of Osisko's significant exploration project in Guerrero. The new Spinco will be a company with regular and strong cash flow, strong future potential for increasing cash flow, and tremendous upside exploration potential."
Strategic Rationale for Agnico Eagle
- Accretive on per share metrics - Net asset value, operating cash flow, free cash flow, production, reserves, and resources. The transaction is also expected to improve Agnico Eagle's total cash cost and all-in sustaining cost profiles
- Builds on Agnico Eagle's northern business platform - Canadian Malartic is the largest producing gold mine in Canada with the ability to produce an average of approximately 600,000 gold ounces per year for 14 years and is a great strategic fit with Agnico Eagle's skills and operating assets in the Abitibi
- Manageable debt levels and minimal share dilution - The added debt is very manageable in the context of a larger business generating stronger free cash flow. With Osisko shareholders holding a 16.7% interest in Agnico Eagle post the transaction, the dilution is in line with many of the company's previous acquisitions
- Simple, low risk acquisition - Acquisition of an operating mine in Agnico Eagle's core Qubec region. The Canadian Malartic Mine is an asset without permitting, construction capital or start up risk
- Maintains strategy of operating in supportive regions with low political risk - The addition of a fourth operating mine in Qubec and a large prospective exploration portfolio in Ontario further enhances Agnico Eagle's already low level of political risk
- Enhances and adds flexibility to Agnico Eagle's project pipeline - The advanced Kirkland Lake project further enhances Agnico Eagle's development portfolio
- Potential synergies with existing Qubec operations - Agnico Eagle expects synergies with its other Abitibi operations and there is potential to further optimize the Canadian Malartic Mine plan.
Sean Boyd , President and Chief Executive Officer of Agnico Eagle stated: "Agnico Eagle has approximately 50 years of operating history in Qubec, and over that time the company has continued to expand its mining presence in a measured and systematic way. This transaction further enhances our Qubec operating platform through the addition of a fourth producing mine. With this acquisition, Agnico Eagle will become Qubec's largest gold producer, which demonstrates our commitment to Qubec and various stakeholders in the Province.
"Traditionally, Agnico Eagle has focused on acquisitions with minimal dilution to shareholders. With Osisko shareholders holding a 16.7% interest in Agnico Eagle after the transaction, we believe that the dilution is in line with many of the Company's previous acquisitions. However, this transaction comes without permitting, construction capital, or start-up risk, and is immediately accretive to Agnico Eagle on a number of key per share metrics. In addition, the transaction is expected to lower our total cash costs and all-in sustaining costs.
"On the back of record first quarter gold production (366,421 ounces), the Company has made repayments of US$130 million on its revolving credit facility since the beginning of the year, which further enhances our financial flexibility and the ability to fund our bid.
"We look forward to working with Yamana as a partner at the Canadian Malartic Mine, and at the exploration properties. Yamana's expertise at their large open pit Chapada gold copper mine in Brazil should complement our operating experience at Meadowbank and in the Abitibi region."
Strategic Rationale for Yamana
Yamana is a proven operator with the stated objectives of operating in mining friendly jurisdictions in the Americas with a balanced approach to production growth, cost containment and margin preservation to maximize and increase cash flow. This partnership with Agnico Eagle provides Yamana with significant production growth at costs consistent with its existing cost structure, enhanced generation of cash flow and an expanded future project pipeline. It will also provide entry into one of the world's best mining jurisdictions without the level of risk generally associated with new locales given the strong operational management at Canadian Malartic and Agnico Eagle's decades-long experience in the region.
Peter Marrone , Chairman and Chief Executive Officer of Yamana commented: "At Yamana, we focus on both top-line and bottom-line growth as we strive to deliver value to shareholders, and with this acquisition we expect to deliver exceptional value to our shareholders. This acquisition provides value across all key per share metrics. The Canadian Malartic mine is a world class asset that will become a cornerstone in our portfolio alongside Chapada and El Pen. We are also pleased with this relatively low risk entry into Qubec, a province with an established pedigree of mining that complements our existing presence in the Americas. Consistent with our disciplined and balanced approach to growth, we are able to acquire 50% of the Canadian Malartic mine and the other Canadian development and exploration properties of Osisko while maintaining our strong balance sheet and financial flexibility.
"We are delighted with our improved structure and offer. With Agnico Eagle as our partner, the operational management at Canadian Malartic and as we open our own operational office in Qubec, these benefits will be further enhanced with our collective experience with large open pit conventional mining with their jurisdictional expertise. We are pleased with our entry into Qubec and we look forward to increasing our profile in this mining friendly jurisdiction."
The transaction is subject to the approval of Osisko shareholders by a two thirds vote at a meeting which is expected to be held later in May 2014. The approval of the shareholders of Agnico Eagle and Yamana is not required. The Agreement is expected to close by early June 2014, following receipt of all shareholder and court, regulatory and exchange approvals.
Pursuant to the terms of the Agreement, Osisko is subject to customary non-solicitation covenants. In the event a superior proposal is made to Osisko, Agnico Eagle and Yamana have a 5 business day right to match such proposal, and under certain circumstances in the event Osisko's board of directors changes its recommendation or terminates the Agreement, Osisko has agreed to pay a termination fee of C$195 million to Agnico Eagle and Yamana, shared equally. In certain other circumstances where the transaction is not completed, Osisko has agreed to reimburse Agnico Eagle's and Yamana's expenses in the amount of C$10 million each for their costs.
Osisko's Board of Directors has determined that the offer by Agnico Eagle and Yamana is superior to the proposal made by Yamana on April 2, 2014 and Yamana and Osisko have agreed to terminate their agreement. Yamana has agreed to waive its break fee under that agreement.
Agnico Eagle has engaged TD Securities Inc. and Bank of America Merrill Lynch as its financial advisors and Davies Ward Phillips & Vineberg LLP as its legal advisor in connection with the Agreement.
Yamana has engaged Canaccord Genuity Corp. as its financial advisor and Norton Rose Fulbright Canada LLP and Paul, Weiss, Rifkind, Wharton & Garrison LLP as its legal advisors in connection with the Agreement. Yamana has also engaged National Bank Financial Markets to provide an opinion as to the fairness of the consideration payable by Yamana, from a financial point of view, to Yamana.
Osisko has engaged BMO Capital Markets and Maxit Capital LP as its financial advisors and Bennett Jones LLP and Stikeman Elliott LLP as its legal advisors in connection with the Agreement.
Conference Call Information
Agnico Eagle, Yamana, and Osisko will host a conference call on Wednesday April 16, 2014 at 10:00 a.m. EDT, where senior management of each company will discuss the details of the transaction.
| Toll Free (North America): | | | | | 1-800-769-8320 |
| Toronto Local and International: | | | | | 416-340-8527 |
| Webcast: | | | | | www.agnicoeagle.com |
Conference Call REPLAY:
| Toll Free (North America): | | | | | 1-800-408-3053 | | | | | Passcode 6977252 |
| Toronto Local and International: | | | | | 905-694-9451 | | | | | Passcode 6977252 |
The conference call replay will be available from 1:00 p.m. EDT on April 16, 2014 until 11:59 p.m. EDT on April 30, 2014.
The webcast along with presentation slides will be archived for 180 days on the website. For further information on the conference call or webcast, please contact: