Acquisition Eight Capital analyst Felix Shafigullin sees Agnico Eagle Mines Ltd. “well positioned” to secure enough support from O3 Mining Inc. shareholders to finalize its $204-million acquisition, “barring a stronger competing offer.”
“In our view, a competing offer is unlikely to be presented, given the support of O3′s key shareholders for the deal and how many of the outstanding shares have already been tendered into Agnico’s offer,” he added.
Accordingly, he moved his rating for Toronto-based O3 to “neutral” from “buy” previously.
“We estimate that Agnico’s offer valued O3 at approximately $40 per ounce of gold contained in total attributable resources (including total resources at O3′s flagship Marban Alliance project and the secondary Alpha property located next to Agnico’s Akasaba West mine), net of O3′s cash, investments, and convertible debt,” he said. “In our view, Agnico’s offer was opportunistic, given that O3′s shares were trading near the all-time low prior to the transaction announcement, and valued O3 on a low end of precedent transactions for advanced-stage gold exploration companies. Nonetheless, we expect the offer to close successfully, given that it is supported by Gold Fields Ltd. (GFI-JSE), O3′s largest shareholder controlling approximately 17% of the company. Gold Fields obtained its stake in O3 as a result of acquiring Osisko Mining Ltd. in October 2024.
“Gold Fields has entered into a lock-up agreement with Agnico to tender its shares of O3 into Agnico’s offer. Combining the shares tendered by Gold Fields with other lock-up agreements that Agnico has established with O3′s shareholders (including all of the Directors and management of O3), approximately 39 per cent of the outstanding common shares of O3 have already been tendered into the offer. In addition, Agnico itself already controls approximately 5 per cent of O3 on a partially diluted basis, comprised of 0.9 million common shares, 0.3 million warrants, and a $10-million debenture convertible into 4.9M shares of O3.”
Mr. Shafigullin’s target moved to $1.67 from $3.85 to reflect the offer. The average is $1.79.