The Board of Directors of each of Agnico Eagle and Kirkland Lake Gold have unanimously approved the Merger

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Agnico Eagle and Kirkland Lake Gold announce filing of joint management information circular in connection with proposed merger. (Credit: Khusen Rustamov from Pixabay)

Agnico Eagle Mines Limited (TSX: AEM) (NYSE: AEM) (“Agnico Eagle” or the “Company”) and Kirkland Lake Gold Ltd. (TSX:KL,NYSE:KL, ASX:KLA) (“Kirkland Lake Gold”) are pleased to announce today that they have filed a joint management information circular dated October 29, 2021 (the “Joint Circular”) and related meeting and proxy materials in connection with their respective special meetings of shareholders (the “Meetings”) scheduled to be held on November 26, 2021. The purpose of the Meetings is to seek approval for certain matters in connection with their previously announced merger of equals (the “Merger”) to be effected by way of a plan of arrangement under the Business Corporations Act (Ontario).

The Merger

Pursuant to the merger agreement dated September 28, 2021 (as amended, the “Merger Agreement”), Kirkland Lake Gold shareholders (“Kirkland Shareholders”) will receive 0.7935 of an Agnico Eagle common share (the “Agnico Shares”) for each Kirkland Lake Gold common share (the “Kirkland Shares”) held. The Merger will require the affirmative vote of at least two-thirds of the votes cast by holders of Kirkland Shares present (virtually) or represented by proxy and entitled to vote at the special meeting of Kirkland Shareholders (the “Kirkland Meeting”). The issuance of shares by Agnico Eagle in connection with the Merger is subject to the approval of at least a majority of votes cast by holders of Agnico Shares (the “Agnico Shareholders”) present (virtually) or represented by proxy and entitled to vote at the special meeting of Agnico Shareholders (the “Agnico Meeting”). Immediately upon completion of the Merger, existing Agnico Shareholders and existing Kirkland Shareholders are expected to own approximately 54% and 46% of the Agnico Shares in the combined company, respectively (on a non-diluted basis).

Board of Directors’ Recommendations

The Board of Directors of each of Agnico Eagle and Kirkland Lake Gold have unanimously approved the Merger and recommend that their respective shareholders vote “FOR” the matters put before them at the respective Meetings.

Reasons for the Merger

In recommending the Merger, the Board of Directors of Agnico Eagle and the Board of Directors of Kirkland Lake Gold considered a number of factors including the following:

  • Creating a World-Leading Senior Gold Producer. The Merger will create the combined company which will continue under the name Agnico Eagle Mines Limited, which will be a high-quality senior gold producer with the lowest all-in sustaining cost per ounce of gold, highest EBITDA margin and lowest-risk portfolio of operating mines among its senior gold peers. The combined company is expected to produce approximately 3.4 million of ounces of gold in 2021 on a pro forma basis.

  • Enhances Position in one of the Most Prolific and Prospective Gold Regions in the World. The combined company is expected to be Canada’s leading gold producer, with anticipated production in the country of approximately 2.5 million ounces of gold in 2021, or approximately 75% of 3.4 million ounces of total expected gold production, on a pro forma basis. The combined portfolio will be anchored by high-quality gold production in Ontario, Quebec and Nunavut in Canada, as well as at the Fosterville Mine in Victoria, Australia, Kittila in the Lapland region of Northern Finland and Pinos Altos and La India in Northern Mexico.

  • Unique Synergies to Drive Significant Value Creation.

    • The combination of Agnico Eagle and Kirkland Lake Gold creates a unique opportunity to unlock significant operational, development and strategic synergies along the Abitibi-Kirkland Lake corridor and to leverage sector-leading technical expertise to create additional value across the portfolio.

    • The combined company is expected to generate over $0.8 billion and $2 billion in pre-tax synergies and optimization benefits over the next five and ten years, respectively.

    • While substantially unquantified, the Merger also offers significant potential for more efficient sharing of established competencies developed individually by Kirkland Lake Gold and Agnico Eagle, as well as significant opportunity to successfully innovate as operations are modernized.

  • Maintain a Strong Leadership Team with a Proven Track-Record. The combined company will benefit from the combination of two strong management teams with proven track-records of growing per share value in key metrics such as production, mineral reserves, cash flow and net asset value.

  • Unparalleled Track Record of Growing Mineral Reserves and Mineral Resources. The Merger will combine the only two companies among senior gold peers to have grown mineral reserves and production per share over the last 10 years through consistent investment in exploration and value-added acquisitions.

  • Industry-Leading ESG with Ability to make Long-Term ESG Investments. The combined company is positioned to be a leader in environmental, social and governance initiatives, with one of the lowest greenhouse gas emission rates per ounce, and will have an enhanced ability, through the sharing of established competencies, joined forces on innovation and scale, to be a more effective collaborator with key suppliers, government and communities, and to become net zero by 2050 or sooner.

  • Enhances and Adds Flexibility to an Attractive Minesite and Project Pipeline. The Merger will combine a robust pipeline of growth projects and exploration opportunities. These projects are located in existing mining camps and are expected to drive manageable, relatively low-risk, high-return production growth over the next decade and more. For example, there is an opportunity to develop Agnico Eagle’s Kirkland Lake area greenfield development assets, with the benefit of Kirkland Lake Gold’s established infrastructure at the Macassa Mine and the Holt Complex.

  • Provides the Financial Strength to Increase Capital Distributions to Shareholders While Investing in Growth Projects. The increased financial strength of the combined company is expected to provide enhanced financial flexibility to fund both the robust pipeline of growth projects and to build on a proven track record of growing sustainable capital returns to shareholders while also maintaining a strong investment-grade balance sheet.

  • Strategic Alternative Process. The Board of Directors of Kirkland Lake Gold has periodically reviewed a range of strategic alternatives for creating shareholder value and in the ordinary course of business Kirkland Lake Gold has had regular engagement with several industry peers in that regard, including other potential transactions. During the summer of 2021, Kirkland provided due diligence access in connection with a potential change of control transaction with two of the most logical prospective counterparties, did not receive any compelling offers and determined, supported by analysis from its financial advisors, that the Merger was the best way to maximise value for Kirkland Shareholders over the long term in light of the significant synergies expected to be realized by the combined company.

  • Extensive Due Diligence and Arm’s Length Negotiations. The Arrangement and the terms of the Merger Agreement are the result of extensive due diligence and a comprehensive negotiation process, undertaken with the oversight and participation of Agnico Eagle’s and Kirkland Lake Gold’s respective legal counsel and financial advisors.

  • Stakeholder Analysis. The terms of the Merger Agreement treat all stakeholders of Agnico Eagle and Kirkland Lake Gold, respectively, equitably and fairly.

Source: Company Press Release