ABX Barrick Gold Corp. (BC) (delisted)

Agnico-Eagle Mines Ltd. (AEM) acquired three million shares of Colibri Resource Corporation through private placement at a price of $0.20 per unit for a total consideration of $600,000 in cash. Each Unit consisted of one common share, resulting from the acquisition of a total of 3 million Common Shares of Colibri by the company, and one share purchase warrant, being 3 million Warrants, each full Warrant entitling the holder to acquire one Common Share at a price of $0.35 per share for the next twenty-four months following the closing date.

Combined with the 3.0 million common shares and 1 million share purchase warrants of Colibri previously held, Agnico now holds 6.0 common shares and 4.0 million share purchase warrants representing an ownership position in Colibri of 18.6% on a partially diluted basis.

The proceeds from the Agnico-Eagle Financing will be used for general working capital for the Company's operations in Sonora, Mexico including the previously announced 2000 meter drill program at the Ramard Silver project near the municipality of Carbo, Sonora.

As per the Agreement, Agnico-Eagle will acquire 75% interest in the Company's Colibri gold project in Sonora, Mexico and form a joint venture with the Company by making qualified exploration expenditures and payments to Colibri.

For attaining 75% interest in the Colibri Project, Agnico-Eagle is required to spend, over the next three years, a minimum of $3.0 million in exploration expenditures as well as complete a positive feasibility study within five years. In addition, Agnico-Eagle will be required to make option payments totaling $1,452,000 over a seven-year period. After completion of the feasibility study and Agnico-Eagle earning a 75% in the Colibri Project, Agnico-Eagle and Colibri will form a joint venture to develop the Colibri Project.

The conditions that were required to be fulfilled included approval of the TSX Venture Exchange (TSX-V), incorporation of a Mexican wholly-owned subsidiary of a British Columbia company to hold the right, title and interest in the Colibri Project and transfer of the concessions comprising the Colibri Project to the Operating Company.

Last month, Agnico reported quarterly net income of $45.3 million or 27 cents per share for the first quarter of 2011.  Net income includes a non-cash foreign currency translation loss of $14.1 million, or $0.08 per share, stock option expense of $18.5 million, or $0.11 per share, an expense of $3.1 million, or $0.02 per share related to the March 10, 2011 Meadowbank fire, and a gain on sale of investments of $4.4 million, or $0.03 per share.  

Adjusted net income for the reported quarter was $76.5 million, or $0.45 per share compared with $22.3 million or $0.14 per share in the prior-year quarter. Results were below the Zacks Consensus Estimate of 53 cents per share.

Agnico-Eagle faces stiff competition from Barrick Gold Corporation (ABX), Kinross Gold Corporation (KGC) and Newmont Mining Corp. (NEM).

Currently, we maintain a Neutral recommendation on the stock and a Zacks #3 Rank (Hold).

 
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