Canadian miner Agnico Eagle Mines said on Tuesday it would buy TMAC Resources for about $286.6 million , two weeks after Canada rejected Shandong Gold Mining’s bid for the indebted company on national security grounds.
The deal is a lifeline for struggling TMAC and adds to Agnico’s already sizeable footprint in the Canadian Arctic territory of Nunavut, where it operates the Meliadine mine and Meadowbank gold complex.
Toronto-based Agnico Eagle said it will pay $2.20 per share for TMAC, which operates a gold mine in the Hope Bay region of Nunavut, higher than the $1.75 per share Shandong Gold was to pay for the company.
About $680 million is needed for an expansion of TMAC’s underperforming Doris mine, including construction of a new mill.
“We’re going to revisit all of that,” Agnico CEO Sean Boyd said. However, the immediate focus is on increasing exploration.
The acquisition adds reserves and resources of 10-plus million ounces “at an extremely good price. And it’s in an area we know well,” Boyd said.
“We feel very comfortable with our ability to improve operations there and to find a lot more gold.”
Shandong Gold’s $230 million bid for TMAC was blocked by the Canadian authorities on concerns about a Chinese state-owned entity operating in the country’s sensitive Arctic region.
Mineral-rich but thinly populated, Nunavut is seen by Canada as vital as retreating sea ice opens up potential new shipping routes.
A Shandong Gold executive said the company had already acquired a stake of under 10 per cent in TMAC for around $15 million at $1.75 per share in the first half of 2020 as the target company needed some funding for its procurement needs.
Selling these shares at a higher price compensates somewhat for “fees and time wasted on the project,” the executive added.