Canadian Merger to Create New Gold Mining Giant

Researched by Industrial Info Resources (Sugar Land, Texas)--The planned "merger of equals" between Toronto, Canada-based firms Agnico Eagle Mines Limited (NYSE:AEM) and Kirkland Lake Gold Limited (NYSE:KL) would create a new global gold mining major. Subject to a vote by the companies' respective shareholders, the proposed C$13.5 billion (US$10.6 billion) deal would combine Canada's largest and second-largest gold mining firms, with a mineral reserve base of 48 million ounces of gold. Industrial Info is tracking more than US$3.5 billion worth of projects by the two companies.

The merged entity would retain the name of Agnico Eagle, with assets in Canada as well as Australia, Finland and Mexico. The transaction is expected to close in December 2021 or in the first quarter of 2022. Upon closing, Agnico Eagle and Kirkland Lake Gold shareholders would own about 54% and 46% of the combined company, respectively.

"This merger starts a new chapter in Agnico Eagle's 64-year history and creates the leading low-risk global gold company with growing production, low costs and strong ESG (environmental, social and governance) leadership," Agnico Chief Executive Officer Sean Boyd said in a Tuesday press release.

In a webcast, Boyd said the industry is likely to see more consolidation during the next few years. "The risk level is important. The industry is in a period right now where a lot of investors are indifferent about gold, and investors are looking for high-quality, low-risk businesses that are generating significant free cash flow."

The deal includes four large Canadian gold mines, he said, with synergies in the consolidation of Canada's Abitibi Greenstone Belts assets.

Based on production estimates for this year, the new company would rank as the world's third-largest producer, with 3.4 million ounces, behind Newmont Corporation (Denver, Colorado) and Barrick Gold Corporation (NYSE:GOLD) (Toronto).

The merged company will focus on driving brownfield opportunities, Boyd added.

Click on the image at right for a graph showing project activities by the combined companies, by project type.

One of the projects under construction is Kirkland Lake's Macassa Underground Gold Mine #No. 4 Shaft Addition in Ontario. Kirkland Lake plans to increase the Macassa South Mine Complex's capacity to 400,000 ounces per year by constructing the new shaft to de-risk the operation, support more effective underground exploration and improve working and ventilation conditions. Subscribers to Industrial Info's Global Market Intelligence (GMI) Metals & Minerals Project Database can click here for a detailed report.

Also under construction is Agnico Eagle's Hope Bay Madrid North Underground Gold Mine Addition and Mill Ramp-Up in the territory of Nunavut in northern Canada. The project is part of a plan to develop Hope Bay as 715,000-ton-per-year operation, producing 160,000 ounces of gold per year over a 20-year mine life. Subscribers can click here for a project report.

Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, six offices in North America and 12 international offices, is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. Industrial Info's quality-assurance philosophy, the Living Forward Reporting Principle, provides up-to-the-minute intelligence on what's happening now, while constantly keeping track of future opportunities. Follow IIR on: Facebook - Twitter - LinkedIn.