A refiner pours bars of gold at Agnico-Eagle's Meadowbank Mine facility in Meadowbank Mine, Nunavut on Wednesday, August 24, 2011.Sean Kilpatrick/The Canadian Press
Agnico-Eagle Mines Ltd. is increasing its position in Mexico with the purchase of gold explorer Grayd Resource Corp. for $275-million.
The Toronto-based gold producer said Monday that Grayd shareholders will be offered a combination of cash and shares valued at $2.80 per Grayd share.
In return, Agnico-Eagle will get ownership of the La India project in the Mulatos gold belt in Sonora, Mexico. The project has an indicated resource of 26.8 million tonnes at a grade of 0.88 of a gram per tonne, the company said.
Grayd has also recently discovered the Tarachi gold prospect covering about 54,000 hectares that's about 10 kilometres north of La India.
"This acquisition is consistent with our long-term strategy of building value by bringing our mine development and exploration skills to promising early stage gold deposits and projects," said Agnico-Eagle vice chairman and CEO Sean Boyd in a release.
"It is expected that La India and, further out potentially Tarachi, will contribute to the ongoing growth in Agnico-Eagle's gold production and cash flows reflecting the high quality of work performed by Grayd."
The offer for Grayd, which is based in Vancouver, will give shareholders the option to receive either $2.80 in cash or 0.04039 of an Agnico-Eagle share and five cents in cash, to a maximum cash payout of about $92-million.
The offer is a 65.7-per-cent premium over the company's 20-day average weighted price ending Sept. 16, the companies said.
"Thanks to the hard work and dedication of our team, our Mexican properties have advanced to the stage that it is time for us to join with a fully funded and well established mine builder like Agnico-Eagle for their final stage of development into gold mines" said Grayd president and CEO Marc Prefontaine.
Agnico-Eagle is a gold producer with mining operations in Canada, Finland and Mexico as well as exploration and development projects.