Agnico-Eagle Closes Urastar Buy - Analyst Blog
May 20 2013 - 12:10PM
Zacks
Agnico-Eagle
(AEM) has wrapped up its takeover of mining company Urastar Gold
Corp. The Canadian miner acquired all the outstanding shares of
Urastar pursuant to a statutory plan of arrangement under the
Business Corporations Act (British Columbia). Following closure of
the deal, Urastar is now a fully-owned subsidiary of Agnico
Eagle.
Agnico-Eagle penned a definitive
agreement with Urastar in March 2013. Urastar is engaged in the
exploration of former gold producing regions in Sonora, Mexico,
which is among the richest gold producing belts globally. Under the
deal terms, each Urastar shareholder will receive C$0.25 in cash in
exchange for each Urastar share they held.
Holders of in-the-money share
purchase warrants who have not otherwise exercised their warrants
will receive C$0.15 in cash for each warrant they held.
Out-of-the-money warrants and options will be cancelled as part of
the deal. The value of the deal (on a basic shares outstanding
basis and assuming exercise of in-the-money warrants) is roughly
C$10.7 million (around $10.5 million).
The deal was cleared at a special
meeting on May 14 by 99.76% of Urastar shareholders, voting
together as a single class. Final approval for the acquisition was
secured from the Supreme Court of British Columbia on May 15.
Agnico-Eagle, which is among the
prominent Canadian gold miners along with Barrick
Gold (ABX), Goldcorp (GG) and
Kinross Gold (KGC), announced tepid first-quarter
2013 results last month. Its profit, as reported, slid roughly 70%
year over year to $23.9 million or 14 cents a share. Revenues
slipped roughly 11% year over year to $423.2 million in the
reported quarter.
The results were hurt by a
decline in payable gold production which dropped 7% year over year
to 236,975 ounces, mainly due to the suspension of the Creston
Mascota heap leach facility. While Agnico-Eagle achieved record
quarterly throughput at its Meadowbank mine in northern Canada, its
Kittila mine in northern Finland recorded an 8% decline in payable
gold production in the quarter.
Agnico-Eagle backed its
production guidance for 2013 and sees payable gold production in
the range of 970,000 ounces to 1,010,000 ounces with second half of
the year contributing significantly to the overall
production.
Resumption of production at
Kittila, higher production at Creston Mascota, the ongoing ramp up
of production at LaRonde mine in Quebec, higher expected grades at
Meadowbank, and the start of production at the Goldex mine in
Quebec are expected to be the contributing factors.
Agnico-Eagle currently retains a
short-term (1 to 3 months) Zacks Rank #5 (Strong Sell).
BARRICK GOLD CP (ABX): Free Stock Analysis Report
AGNICO EAGLE (AEM): Free Stock Analysis Report
GOLDCORP INC (GG): Free Stock Analysis Report
KINROSS GOLD (KGC): Free Stock Analysis Report
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