Agnico-Eagle Mines Ltd. [AEM-TSX, NYSE] is making a strategic investment in Rupert Resources Ltd. [RUP-TSXV; R05-FSE], spending $13.1 million to acquire a 9.9% stake in the junior.
Rupert’s key asset is a 100% interest in a gold mine and related properties which are adjacent to Agnico’s Kittila gold mining operation in northern Finland. Rupert’s Pahtavaara gold mine and mill sits on 297 km2 of exploration permits and concessions in the Central Lapland Greenstone Belt.
Pahtavaara previously operated between 1996 and 2014, producing almost 450,000 ounces of gold.
Rupert also owns a 100% interest in the Gold Centre property, which consists of mineral claims near Red Lake, Ontario.
In an agreement announced after the close of trading on February 10, 2020, Agnico said it has agreed to subscribe for 15.4 million units of Rupert in a non-brokered private placement priced at 85 cents per unit. The total consideration is $13.1 million.
Each unit is comprised of one common share of Rupert and 0.75 of one common share purchase warrant. Each warrant entitles the holder to acquire one common share for $1 for three years following the date of closing, which is expected to be on February 12, 2020.
Once the private placement closes, Agnico-Eagle will own 15.4 million common shares and 11.5 million warrants representing approximately 9.9% of the issued and outstanding common shares of Rupert on a non-diluted basis and 16.1% on a partially diluted basis.
Subject to closing, Agnico Eagle and Rupert will enter into a shareholders rights agreement that gives Agnico certain rights so long as the major maintains prescribed ownership thresholds in Rupert. They include:
- The right to participate in equity financings in order to maintain its pro rata ownership in Rupert at the time of any such financing or acquire up to 9.9% or 16.1% of Rupert (depending on whether Agnico Eagle has exercised the warrants at such time);
- The right to nominate at least one person to the Rupert board of directors.
Agnico said the shares and warrants are being acquired for investment purposes and it may buy more or sell down part of its interest depending on market conditions.
Rupert shares advanced on the news, rising 9% or $0.07 to 85 cents on volume of 463,000. The shares now trade in a 52-week range of 65 cents and $1.
Since acquiring the Pahtavaara Mine 2016, Rupert says it has undertaken extensive new exploration and geological modelling utilizing the significant amount of historical drill data and 35 km of underground tunneling that exists for the deposit.
Rupert says this new approach demonstrated that the mineralized system at Pahtavaara is significantly larger than previously thought and typical of many other greenstone hosted belts.
A detailed ground gravity survey over 200 km2 of the licence, new interpretation of existing geophysical data and new drilling culminated in the discovery of new incidences of gold mineralization at Area 1, 25 km from the Pahtavaara mill in May 2019.
Agnico-Eagle is a senior Canadian gold mining company with operations in Canada, Finland and Mexico. It is also conducting exploration activity in each of those countries as well as in the United States and Sweden. The company is led by Sean Boyd, who was appointed CEO in 1998 after having served as chief financial officer from 1990 to 1998.