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Agnico-Eagle Mines buys stake in Sulliden Gold for $24 mln

Published: 11:32 09 Apr 2013 EDT

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Agnico-Eagle Mines (NYSE:AEM) (TSE:AEM) says it has invested $24 million into Sulliden Gold Corp (TSE:SUE) through a non-brokered private placement financing, giving the miner a near 10 percent stake in the Canadian gold exploration and development company on a non-diluted basis. 

Agnico-Eagle has agreed to buy 26.97 million units of Sulliden at 89 cents apiece, with each unit made up of one common share and 0.7 of one share purchase warrant. 

Each warrant allows Agnico-Eagle to buy another common share at a price of $1.31 for a period of two years. 

The deal, which is expected to close later this week, will give Agnico a 9.96 percent stake in Sulliden on a non-diluted basis, and a 15.83 percent stake on a partially diluted basis. 

Agnico-Eagle, a Canadian headquartered gold producer with operations in Canada, Finland and Mexico, said in its statement Tuesday that it is acquiring the units for investment purposes. 

The agreement also provides Agnico-Eagle with the right to participate in future equity financings by Sulliden in order to maintain its pro-rata interest, given that it holds no less than five percent of the company. 

Sulliden has assets in Peru and Canada, and is focused on developing the Shahuindo gold project, its 100 per cent owned flagship property located in a prolific gold producing district in northern Peru. 

The deal announced today comes at a time when many gold development companies are searching for alternative ways to raise funds, other than the typical placements with retail investors through brokerage firms, which is currently a challenging market.

As such, more junior mining companies are looking at strategic investments from established mining companies that want to get that early, or development-stage exposure.

Just last week, Kinross Gold Corp (TSE:K)(NYSE:KGC), a Toronto-based gold miner, said it had bought about another 3.6 million units of Revolution Resources (TSE:RV) for roughly $250,000 under a non-brokered private placement financing, as part of the gold giant's strategy to boost its exposure to "quality" exploration plays.

Shares of Sulliden rose 13.5 percent on Tuesday to 84 cents in Toronto on news of the Agnico-Eagle investment, paring year-to-date losses to 10.75 percent. 

Sulliden has a current market cap of $202.17 million. 

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