Agnico-Eagle Mines Ltd (AEM.TO: Quote) said it will double the cash component in its offer for Grayd Resource Corp (GYD.V: Quote) to C$183 million ($181 million), as the Canadian gold miner moves to expand its footprint in Mexico.
Shares of Grayd rose nearly 10 percent to C$2.51 early on Thursday morning on the Toronto Venture Exchange, while those of Agnico were down more than 3 percent at C$45.77 on the Toronto Stock Exchange.
Grayd, which owns the LA India gold project in Sonora, Mexico, is currently reviewing the impact of Agnico suspending operations at its Goldex mine in Quebec because of water inflow and ground instability.
Paradigm Capital cut its price target on Agnico’s stock to C$60 from C$79.50, saying the announcement of the mine closure and the subsequent asset write-off a surprise.
“Catastrophic failure of an apparently strong operating mine in its prime is a rare occurrence, unique in our two plus decades of experience,” Paradigm’s Don MacLean wrote in a note.
NEW CASH COMPONENT
If all Grayd shareholders opt for cash, they will each get about C$1.87 in cash and 0.01371 of an Agnico-Eagle share for every Grayd share, the company said in a statement.
Grayd had about 91.2 million shares outstanding as of October 13, according to Thomson Reuters data.
Agnico said it will still issue a maximum of 2.7 million of its shares for the deal.
($1 = 1.011 Canadian Dollars)
