Editorial: Still plenty of appetite for M&A – (Northern Miner – April 21-27, 2014)

The Northern Miner, first published in 1915, during the Cobalt Silver Rush, is considered Canada’s leading authority on the mining industry.

While private equity financing was the talk of the mining industry in the first quarter, heavy duty mergers and acquisitions are punching their way back to centre stage, as mining majors take advantage of depressed metals prices and share valuations to realign their businesses.

The brawling between Yamana Gold and Goldcorp over Osisko Mining and its prized Canadian Malartic gold mine in Quebec has just seen Agnico Eagle Mines jump over the boards and join the All-Canadian slugfest as third man in on Yamana’s side.

In a surprise move on April 16, Agnico teamed with Yamana to table a joint friendly, cash-and-share takeover bid worth $3.9 billion, or $8.15 per Osisko share, trumping Goldcorp’s recently revised hostile cash-and-share bid of $3.6 billion, or $7.34 per share. The offer is a 10% premium to Osisko’s share price on April 15.

As detailed on our front page, the deal would end with Osisko shareholders owning 14% of Yamana and 17% of Agnico, and would include an innovative spin-out of a cashed-up company with a portfolio of royalties, plus assets such as Osisko’s grassroots project in Mexico.

Perhaps best of all for many Osisko shareholders: the joint Agnico–Yamana bid supersedes Yamana’s somewhat convoluted previous friendly offer, which revolved around the partial purchase of the Canadian Malartic mine rather than a full-on take-out of the company.

We’ll see if Goldcorp comes back with a better offer. The bidding has gotten quite rich, but if any gold company has been full of surprises and willing to pay top dollar for a desired asset, it’s Goldcorp.

Osisko has helped stir the pot with a stellar first-quarter report released on April 8, showing record first-quarter production of 140,029 oz. gold at a head grade of 1.13 grams gold per tonne.

Even better, Osisko saw cash costs of US$613 per oz. and US$555 per oz. in January and February 2014, and is now projecting cash costs of between US$527 and US$577 per oz. for all of 2014, which would be a 16–24% reduction compared to 2013.

For the rest of this editorial, click here: http://www.northernminer.com/news/editorial-still-plenty-of-appetite-for-m-a/1003018521/

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