Canadian gold miner Agnico Eagle Mines Ltd. AEM-T is bulking up in northern Finland, unveiling three acquisitions worth roughly $3.8-billion.
Toronto-based Agnico on Monday announced it has reached agreements to buy Rupert Resources Ltd. RUP-T for up to $2.9-billion in stock and cash, Aurion Resources Ltd. AU-X for $481-million in cash, and B2Gold Corp.’s BTO-T 70-per-cent stake in Fingold Ventures Ltd. for US$325-million.
With all three, Agnico will consolidate its presence in Lapland. The company’s Kittilä mine has been in operation there since 2009 and is one of the biggest gold operations in Europe. Located 150 kilometres north of the Arctic Circle, Kittilä last year produced more than 217,000 ounces of gold.
In a statement on Monday, Agnico said the acquisitions should “substantially enhance the scale, growth and longevity” of its Finnish platform, giving it the potential to eventually produce about half a million ounces of gold a year from the region.
“This consolidated land package is the most prospective land package, not just in Finland, but in all of the Nordic Region,” Agnico chief executive Ammar Al-Joundi said in an interview.
“It was important for us to consolidate all of it because our strategy has always been to go to what we think are the best geologic places with good political stability and try to build a competitive advantage.”
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Agnico is Canada’s most valuable gold company and the second-largest in the world after Colorado-based Newmont. The bulk of its operations are in Canada.
Shareholders of Toronto-based Rupert Resources are set to receive a mix of Agnico shares and up to $3 payable over 10 years for each of their securities. The cash portion will be paid out depending on various minerals projects hitting certain milestones. The offer equates to a 67-per-cent premium to Rupert’s closing price on Friday.
Rupert’s flagship project is Ikkari, in northern Finland, which is located 50 kilometres from Agnico’s Kittilä operation. Production at Ikkari is targeted for 2030, and it is expected to have a 20-year mine life. By integrating Kittilä and Ikkari, Agnico expects to save up to $500-million in operating and development costs.
Josh Wolfson, an analyst with RBC Dominion Securities, said in a note to clients on Monday that while he expects the acquisition will increase Agnico’s profitability, the premium being paid is above the average of what Rupert’s peers trade at.
Mr. Al-Joundi defended the premium, citing the company’s track record of dramatically increasing reserves at many of the projects it has acquired through the years.
“In this business, the way you make money is not just by what you buy, but what you think you’re going to find later on,” he said.
Agnico over the past five years has been a keen acquirer in the gold industry, snapping up TMAC Resources Inc. in 2021, Kirkland Lake Gold Ltd. in 2022, and Yamana Gold Inc.’s gold properties in 2023.
The acquisition of St. John’s-based Aurion will see Agnico take ownership of several exploration projects in Lapland, including the Risti property and Aurion’s 30-per-cent stake in Fingold. Agnico intends to pay Aurion investors $2.60 a share, a 46-per-cent premium to Friday’s closing price.
By buying Vancouver-based B2’s stake in Fingold, Agnico will own 100 per cent of the project. Agnico plans to eventually integrate Fingold with Ikkari.
Agnico also announced a collaboration agreement with B2 on Monday aimed at sharing knowledge at their respective Nunavut operations.
Fahad Tariq, an analyst with Jefferies, said in a note to clients on Monday that the agreement could help resolve some of the technical challenges B2 has experienced at its Goose mine.
Agnico’s experience operating in Nunavut “is extremely valuable for B2, which is trying to get Goose to nameplate capacity,” he said.
The agreement also provides Agnico with firsthand knowledge of Goose that could be helpful should it be interested in consolidating its Nunavut operations in the future, he added.