Canada's Agnico to buy junior explorer to boost Mexico
By Bhaswati Mukhopadhyay
(Reuters) - Canadian gold miner Agnico-Eagle Mines (AEM.TO: Quote) is to buy Mexico-focused junior explorer Grayd Resource Corp GYD.V for about C$275 million ($279.6 million) to expand its reach amid soaring gold prices.
An eight-fold jump in gold prices in the last ten years has spurred miners to boost their global presence as they step up their hunt for the yellow metal.
Toronto-based Agnico's deal follows weeks after Mexico-focused miner AuRico Gold AUQ.TO offered to buy Northgate Minerals NGX.TO for C$1.46 billion.
Agnico, which owns mines across Canada, Mexico and Finland, has set its sights on Grayd's La India project, which is about 70 kilometers north west of Agnico's Pinos Altos gold mine.
The C$2.80 per share offer represents a premium of 44 percent to Grayd's Friday closing of C$1.95 on the Toronto Venture Exchange. Most recent deals in the sector have seen premium ranging between 30 percent and 40 percent.
In April, New Gold Inc NGD.TO offered a 31 percent premium for gold exploration company Richfield Ventures.
"I am thinking that Agnico must be seeing something much more than we know in the marketplace about Grayd," analyst Barry Allan of Mackie Research Capital said.
"On a per ounce basis, it looks like a pricey acquisition." Continued...