Agnico Eagle Mines Ltd. (AEM) just closed the biggest deal in its 57-year history, but that doesn’t mean Chief Executive Officer Sean Boyd is putting away his checkbook.
The gold producer is looking to build up its Latin American presence with smaller deals after it completed the acquisition last week of 50 percent of Canada’s biggest gold mine. Yamana Gold Inc. (YRI) bought the other half of Osisko Mining Corp. in a $3.44 billion deal, the largest in the industry since 2010.
“One of the questions we got when we were out talking to our shareholders with Osisko was, ‘OK, you’re done now I guess?’” Boyd said in an interview at Bloomberg’s Toronto office. “Actually, no we’re not.”
Gold merger and acquisition activity has revived this year after falling to the lowest total deal value in 10 years in 2013 as companies grappled with a sharp drop in the metal’s price. Dealmaking will continue as the largest producers sell assets to simplify unwieldy businesses, while others seek to add lower-cost mines, Boyd said.
Toronto-based Agnico wants to add assets in Mexico, although it would consider entering a new country, Boyd said. Agnico, which also has a mine in Finland as well as four in Canada, is looking for “small” deals where it can increase the value of a project and potentially lower the overall company’s average costs, Boyd said.
Agnico would be able to acquire another two or three mines or projects in the next few years, depending on their location, without overextending itself, Boyd said.
“We have a couple of dozen things that we are constantly looking at,” he said. “For us it’s always been about manageability; it’s OK to grow but if you can’t manage the growth, as we’ve seen from some of our bigger competitors, then you’re not going to get paid for it.”
Gold-mining equities lost about half their value last year as the metal dropped the most in more than three decades. While prices have recovered some ground this year, which helped improve markets for exploration and development companies in need of cash, many so-called juniors are still struggling to access capital.
The mining industry is showing “signs of life” for dealmaking, William Quinn, head of mergers and acquisitions at TD Securities Inc., said at a conference in Toronto June 24.
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