Agnico Eagle and Kirkland Lake GOLD Announce Merger of Equals to Create Highest-Quality Senior GOLD Producer
(All amounts expressed in U.S. dollars unless otherwise noted)
AGNICO EAGLE AND KIRKLAND LAKE GOLD ANNOUNCE MERGER OF EQUALS
TO CREATE HIGHEST-QUALITY SENIOR GOLD PRODUCER
Toronto (September 28 , 2021) – 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”) announced today that they have entered into an agreement (the “Merger
Agreement”) to combine in a merger of equals (the “Merger”), with the combined company to
continue under the name “Agnico Eagle Mines Limited”. The Merger will establish the new Agnico
Eagle as the gold industry’s highest-quality senior producer, with the lowest unit costs, highest
margins, most favourable risk profile and industry-leading best practices in key areas of
environmental, social and governance (“ ESG”). Upon closing of the Merger , the Company is
expected to have $2.3 billion of available liquidity, a mineral reserve base of 48 million ounces of
gold (969 million tonnes at 1.53 grams per tonne), which has doubled over the last 10 years, and
an extensive pipeline of development and exploration projects to drive sustainable, low -risk
growth.
The Merger will create a best-in-class gold mining company operating in one of the world’s leading
gold regions, the Abitibi -Greenstone Belt of northeastern Ontario and northwestern Quebec
(the “Abitibi”), with superior financial and operating metrics. Consolidation within the Abitibi will
also provide the new Agnico Eagle with significant value creation opportunities through synergies
and other business improvement initiatives. Additionally, the Company is established uniquely
as the only gold producer in Nunavut and well positioned internationally with profitable and
prospective assets in Australia, Finland, and Mexico.
The combination of Agnico Eagle and Kirkland Lake Gold combines each company’s strengths
by bringing together two industry leaders in growing per share value in key metrics such as
production, mineral reserves, cash flow and net asset value. Both companies also share a strong
commitment to returning capital to shareholders, with a total of $1.6 billion being returned through
dividend payments and share repurchases since the beginning of 2020 (on a pro forma basis).
Under the Merger Agreement, which the Board of Directors of both companies have unanimously
approved, the new Agnico Eagle will be led by a combined board and management team of
experienced mining and business leaders , bringing together the proven cultures, strengths and
capabilities of both companies. The transaction is expected to close in December 2021 or in the
first quarter of 2022.
Pursuant to the Merger Agreement, Kirkland Lake Gold shareholders will receive 0.7935 of an
Agnico Eagle common share for each Kirkland Lake Gold common share held (the
“Consideration”). The Consideration to Kirkland Lake Gold represents a pproximately a 1%
premium to the 1 0-day volume weighted average prices on the Toronto Stock Exchange, as at
close of trading Friday September 24, 2021 and implies a combined market capitalization of
approximately $24 billion. Upon closing, existing Agnico Eagle and Kirkland Lake Gold
shareholders will own approximately 54% and 46% of the combined company, respectively.
Sean Boyd, Agnico Eagle’s Chief Executive Officer stated, “This merger starts a new chapter in
Agnico Eagle’s 64-year history and creates the leading low risk global gold company with growing
production, low costs and strong ESG leadership. The transaction creates a company with a
strong platform of people, assets and financial resources to continue to build and operate a long
term sustainable and self funding business. Kirkland Lake is an excellent cultural fit with Agnico
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Eagle, and we look forward to working together to further grow our business through exploration,
mine development and optimization of our high -quality asset base. Over time, we believe that
the gold industry will continue to evolve and consolidate and with this transacti on we are well
positioned to take advantage of high -quality opportunities and be a true Canadian mining
champion.”
Tony Makuch, President and CEO of Kirkland Lake Gold, stated, “We are very pleased and
excited to be entering into a combination with Agnico Eagle. It is a unique ‘strength-on-strength’
transaction that combines the two global gold producers with the best track records for increasing
per share value. The deal creates an industry leader with a dominant position in the Canadian
market that is deserving of a premium valuation and is poised to generate superior long -term
shareholder value going forward. The transaction represents a true merger of equals, with the
business of both companies to benefit from the significant financial strength of the merged
company, the extensive pipeline of development and exploration projects to drive future growth,
and the potential to realize significant operational and strategic synergies along the Abitibi -
Kirkland Lake corridor. It is the right deal for our company and its shareholders, our people, the
communities where we operate, and all of our key stakeholder groups.”
Strategic Rationale for the Merger
Key strategic, financial and operational advantages of the combined business include:
• Creates the Highest Quality Senior Gold Producer – The Merger will create the
industry’s highest-quality and lowest-risk senior gold producer. With expected production
of approximately 3.4 million ounces in 2021 at the lowest all-in sustaining costs per ounce
amongst the senior gold producers, the Company remains focused in low-risk jurisdictions
and regions with high geological potential.
• Maintains a Proven and Trusted Senior Leadership Team and Board with a Strong
Track Record of Creating Value Per Share – The combined leadership team will
maintain the consistent and proven strategy of growing both production and profitability
per share.
• Extends Industry Leadership in ESG and Enhances the Capacity to Make Longer
Term ESG Focused Investments – The combined entity will be a leader in energy
performance and GHG emissions intensity, with a commitment to be Net Zero by 2050 or
earlier.
• Enhances Position in one of the Most Prolific and Prospective Gold Regions in the
World – The Merger solidifies the new Agnico Eagle as Canada’s leading gold producer,
with expected annual production in the country of approximately 2.5 million ounces in 2021
(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 Fosterville in Victoria,
Australia, Kittila in the Lapland region of Northern Finland and Pinos Altos and La India in
Northern Mexico.
• Drives Fundamental Value Creation from Significant Unique Synergies Estimated at
$0.8B over 5 Years and $2B over 10 Years (Pre-Tax) – The Merger provides a unique
opportunity to unlock significant operational and strategic synergies along the Abitibi -
Kirkland Lake corridor and to leverage sector-leading technical expertise to surfa ce
additional value across the portfolio.
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• Highlights Track Record of Growing Mineral Reserves and Mineral Resources – The
Merger combines the only two major gold companies to have grown mineral reserves and
production per share over the last 10 years through consistent investment in exploration
and value-added acquisitions, with total mineral reserves increasing by 127% from 2011
to 48 million ounces at December 31, 2020 (on a pro forma basis).
• Enhances and Adds Flexibility to an Attractive Minesite and Project Pipeline – The
Merger combines a robust pipeline of growth projects and exploration opportunities .
These projects are located in existing mining camps and will drive manageable, low-risk,
high-return production growth over the next decade.
• Provides the Financial Strength to Increase Capital Distributions to Shareholders
While Investing in Growth Projects – The Merger significantly enhances the 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 maintaining a strong
balance sheet. In combination, Agnico Eagle and Kirkland Lake Gold have collectively
returned $1.6 billion to shareholders through dividends and share repurchases since the
beginning of 2020 and expects to further increase returns to shareholders in the future.
Board of Directors’ Recommendations
After consultation with its outside financial and legal advisors, the Board of Directors of Agnico
Eagle has unanimously approved the Merger Agreement. The Board of Directors of Agnico Eagle
recommends that Agnico Eagle shareholders vote in favour of the Merger.
TD Securities Inc. has provided an opinion to the Agnico Eagle Board of Directors to the effect
that, as of the date thereof, and based upon and subject to the assumptions, limitations and
qualifications stated in such opinion, the Consideration to be paid in the Merger by Agnico Eagle
is fair, from a financial point of view, to Agnico Eagle. BofA Securities has provided an opinion to
the Agnico Eagle Board of Directors to the effect that, as of the date of such opinion, based upon
and subject to the various assumptions, limitations and qualifications set forth in such opinion
(which will be described in the joint management information circular of Agnico Eagle and Kirkland
Lake Gold that is expected to be mailed to their respective shareholders), the exchange ratio
provided for in the Merger Agreement to be paid in the Merger by Agnico Eagle is fair, from a
financial point of view, to Agnico Eagle.
Kirkland Lake Gold appointed a special committee of independent directors to consider and make
a recommendation with respect to the Merger. Based on the unanimous recommendation of the
Kirkland Lake Gold special committee of independent directors , and after consultation with its
outside financial and legal advisors, the Board of Directors of Kirkland Lake Gold has unanimously
approved the Merger Agreement. The Board of Directors of Kirkland Lake Gold recommends that
Kirkland Lake Gold shareholders vote in favour of the Merger.
BMO Capital Markets and Maxit Capital LP have each provided fairness opinions to the Kirkland
Lake Gold Board of Directors , and CIBC has provided a fairness opinion to the Kirkland Lake
Gold special committee, to the effect that, as of the date thereof, and based upon and subject to
the assumptions, limitations and qualifications stated in each such opinion, the exchange ratio is
fair, from a financial point of view, to the holders of Kirkland Lake Gold shares.
Transaction Summary and Timing
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The Merger will be effected by way of a plan of a rrangement of Kirkland Lake Gold under the
Business Corporations Act (Ontario). At closing, all Kirkland Lake Gold common shares will be
exchanged for the Consideration, being 0.7935 of an Agnico Eagle common share, for each
Kirkland Lake Gold common share held. The arrangement will require the approval of at least 66
2/3% of the votes cast by the shareholders of Kirkland Lake Gold voting at a special meeting of
Kirkland Lake Gold’s shareholders. The issuance of shares by Agnico Eagle under the Merger is
subject to the approval of a simple majority of votes cast by Agnico Eagle shareholders at a
special meeting of Agnico Eagle’s shareholders.
The Merger is also subject to closing conditions customary in transactions of this nature, including
receipt of Competition Act (Canada) and Foreign Acquisitions and Takeovers Act 1975 (Cth)
(Australia) clearance, Ontario court approval and applicable stock exchange approvals . The
Merger Agreement includes reciprocal non-solicitation provisions, a reciprocal $450 million
termination fee and a $20 million expense reimbursement payable in certain circumstances.
Officers and directors of Agnico Eagle have entered into support and voting agreements with
Kirkland Lake Gold, agreeing to vote their shares in favour of the Merger. Officers and directors
of Kirkland Lake Gold have entered into support and voting agreements with Agnico Eagle ,
agreeing to vote their shares in favour of the Merger.
Agnico Eagle and Kirkland Lake Gold have agreed to use their com mercially reasonable efforts
to complete the merger on or before March 31, 2022.
It is anticipated that both shareholder meetings will take place in the fourth quarter of 2021 and
that closing will occur in December 2021 or in the first quarter of 2022 subject to satisfaction of
the conditions under the Merger Agreement.
Following completion of the Merger, the shares of the new Agnico Eagle will continue to trade on
the Toronto Stock Exchange and the New York Stock Exchange, subject to ap proval or
acceptance of each exchange in respect of the Agnico Eagle shares being issued as part of the
Consideration. Kirkland Lake Gold’s shares will be de-listed from the Toronto Stock Exchange,
the New York Stock Exchange, and the Australian Securities Exchange following closing.
Governance, Communities, and ESG
On closing, the combined company will continue to be operated under the new Agnico Eagle
brand and headquartered at Agnico Eagle’s existing head office, and will be led by a proven
leadership team that builds on the strengths and capabilities of both companies. The senior
executive team and Board of Directors of Agnico Eagle will be enhanced by the addition of new
members from Kirkland Lake Gold who all have a wealth of knowledge and experience to support
the combined operations. The Board of Directors of the new Agnico Eagle will consist of 13
directors, comprised of 7 directors of Agnico Eagle and 6 directors from Kirkland Lake Gold. The
key senior management team and directors will include:
• Executive Chair of the Board– Sean Boyd
• Chief Executive Officer – Tony Makuch
• President – Ammar Al-Joundi
• Vice-Chair of the Board – Jeffrey Parr
• Lead Director – Jamie Sokalsky
Agnico Eagle will remain committed to maintaining a strong workforce and culture , robust
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Indigenous peoples, community and stakeholder relations and investment and, as a leader in
ESG matters, driving improved performance and delivering on its vision to continue building and
growing a high-quality, low-risk, sustainable business.
Tax Treatment
Canadian taxable resident shareholders of Kirkland Lake Gold will be able to elect such that they
receive common shares in Agnico Eagle free of Canadian income taxes, and other shareholders
will generally not be subject to Canadian income tax. It is expected that U.S. resident shareholders
of Kirkland Lake Gold will generally receive shares in Agnico Eagle on a tax-deferred basis for
U.S. federal income tax purposes.
Advisors and Counsel
Agnico Eagle has engaged TD Securities Inc., BofA Securities and Trinity Advisors Corporation
as its financial advisors and Davies Ward Phillips & Vineberg LLP as its legal advisor in connection
with the transaction. Kirkland Lake Gold has engaged BMO Capital Markets and Maxit Capital LP
as its financial advisors and Cassels Brock & Blackwell LLP as its legal advisor. The Kirkland
Lake Gold special committee has engaged CIBC World Markets Inc. as its financial advisor and
Fasken Martineau DuMoulin LLP as its legal advisor.
Analyst and Investor Conference Call and Webcast
Agnico Eagle and Kirkland Lake Gold will host a joint analyst and investor conference call and
webcast on September 28, 2021 at 8:00 am Eastern Time to discuss the Merger. Participants are
encouraged to dial in 10 minutes before the scheduled start time. The call-in details are as follows:
Via Webcast:
A live audio webcast of the conference call will be available on the Company's website at
www.agnicoeagle.com.
Via Telephone:
For those preferring to listen by telephone, please dial 416-764-8659 or toll-free 1-888-664-6392.
To ensure your participation, please call approximately five minutes prior to the scheduled start
of the call.
The webcast, along with presentation slides, will be archived for 180 days on the Company's
website. A copy of the investor presentation and associated materials will also be available on
Agnico Eagle ’s and Kirkland Lake Gold ’s investor websites at www.agnicoeagle.com and
www.klgold.com, respectively. An audio recording/replay of the conference call and webcast will
also be made available shortly after the call on the Agnico Eagle and Kirkland Lake Gold websites.
Further Information
Agnico Eagle and Kirkland Lake Gold will file material change reports in respect of the merger in
compliance with Canadian securities laws, as well as copies of the Merger Agreement and forms
of support and voting agreements, which will be available under Agnico Eagle’s and Kirkland Lake
Gold’s respective SEDAR profiles at www.sedar.com.
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Full details of the Merger will be included in a joint management information circular of Agnico
Eagle and Kirkland Lake Gold that is expected to be mailed to their respective shareholders on
or around October 28, 2021.
For further information regarding Agnico Eagle , contact Investor Relations at info@Agnico
Eagle.com or call (416) 947-1212.
For further information regarding Kirkland Lake Gold, contact Anthony Makuch, President, Chief
Executive Officer & Director at [email protected] or call +1 416-840-7884; or Mark Utting, Senior
Vice President, Investor Relations at [email protected] or call +1 416-840-7884.
About Agnico Eagle Mines Limited
Agnico Eagle is a senior Canadian gold mining company that has produced precious metals since
1957. Its operating mines are located in Canada, Finland and Mexico, with exploration and
development activities in each of these countries as well as in the United States and Colombia.
Agnico Eagle and its shareholders have full exposure to gold prices due to its long-standing policy
of no forward gold sales. Agnico Eagle has declared a cash dividend every year since 1983.
About Kirkland Lake Gold Ltd.
Kirkland Lake Gold Ltd. is a senior gold producer operating in Canada and Australia that is
targeting 1,300,000 – 1,400,000 ounces of production in 2021. The production profile of Kirkland
Lake Gold is anchored by three high-quality operations, including the Macassa Mine and Detour
Lake Mine, both located in Northern Ontario, and the Fosterville Mine located in the state of
Victoria, Australia. Kirkland Lake Gold’s solid base of quality assets is complemented by district
scale exploration potential, supported by a strong fin ancial position with extensive management
expertise.
Cautionary Note Regarding Forward-Looking Information
The information in this news release h as been prepared as at September 28, 2021. Certain
statements in this news release, referred to herein as “forward-looking statements”, constitute
“forward-looking statements” within the meaning of the United States Private Securities Litigation
Reform Act of 1995 and “forward-looking information” under the provisions of Canadian provincial
securities laws. All statements, other than statements of historical fact, that address
circumstances, events, activities or developments that could, or may or will occur are forward -
looking statements. These forward-looking statements can be identified by the use of words such
as “anticipate”, “could”, “estimate”, “expect”, “future, “plan”, “possible”, “potential”, “may”, “will”,
“would” or similar terms. Forward -looking statements in this news release include, but are not
limited to: statements relating to the expected outcomes of the Merger, including the combined
company’s assets, cost structure, financial position, cash flows and growth prospects ; the
anticipated benefits and synergies of the combined operations; the ability of Agnico Eagle and
Kirkland Lake Gold to complete the Merger on the terms described herein, or at all; the anticipated
timeline for the completion of the Merger; and receipt of regulatory approvals, stock exchange
approvals and the necessary Competition Act (Canada) and Foreign Acquisitions and Takeovers
Act 1975 (Cth) (Australia) approvals. The combined and/or pro forma financial information
included in this news release does not reflect what the actual financial and operational results
would necessarily have been had Agnico Eagle and Kirkland Lake Gold operated as a single
combined company for the periods presented, and such information does not purport to project
the combined company’s financial results or results of operations for any future period.
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Forward-looking statements are necessarily bas ed upon a number of factors and assumptions
that, while considered reasonable by Agnico Eagle and Kirkland Lake Gold as of the date of such
statements, are inherently subject to significant business, economic, operational, and other risks,
uncertainties, contingencies and other factors, including those described below, which could
cause actual results, performance or achievements of Agnico Eagle and Kirkland Lake Gold to
be materially different from results, performance or achievements expressed or implied by such
forward-looking statements and, as such, undue reliance must not be placed on them. Forward -
looking statements are also based on numerous material factors and assumptions, including as
described in this news release, including with respect to: Agnico Eagle’s and Kirkland Lake Gold’s
present and future business strategies; operations performance within expected r anges;
anticipated future production and cash flows; local and global economic conditions and the
environment in which Agnico Eagle and Kirkland Lake Gold will operate in the future; the price of
gold, copper, silver and other key commodities; projected mineral grades; international exchange
rates; anticipated capital and operating costs; and the availability and timing of required stock
exchange, regulatory, governmental and other approvals for the completion of the merger.
Many factors, known and unknown, could cause actual results to be materially different from those
expressed or implied by such forward-looking statements. Such risks include, but are not limited
to: the ability to consummate the Merger; the ability to obtain requisite shareholder approvals and
the satisfaction of other conditions to the consummation of the Merger on the proposed terms in
the time assumed; the ability to obtain necessary stock exchange, regulatory, governmental or
other approvals in the time assumed; the ability to realize the anticipated benefits of the Merger
or implementing the business plan for the combined company, including as a result of a delay in
completing the Merger or difficulty in integrating the businesses of the companies involved
(including the retention of key employees); the ability to realize synergies and cost savings at the
times, and to the extent, anticipated; the potential impact on exploration activities; the potential
impact of the announcement or consummation of the Merger on relationships, including with
regulatory bodies, employees, s uppliers, customers, competitors, First Nations and other key
stakeholders; the extent and manner to which COVID-19, and measures taken by governments,
Agnico Eagle, Kirkland Lake Gold or others to attempt to reduce the spread of COVID -19, may
affect Agnico Eagle and Kirkland Lake Gold , whether directly or through effects on employee
health, workforce productivity and availability (including the ability to transport personnel to the
their respective operations), travel restrictions, contractor availability, supply availability, ability to
sell or deliver gold dore bars or concentrate, availability of insurance and the cost thereof, the
ability to procure inputs required for Agnico Eagle’s and Kirkland Lake Gold ’s operations and
projects or other aspects of Agnico Eagle’s and Kirkland Lake Gold’s business; Agnico Eagle’s
and Kirkland Lake Gold ’s economic model and liquidity risks; fluctuations in the price of gold,
copper or certain other commodities (such as silver, diesel fuel, natural gas and electricity);
financial services risk; the risks associated with Agnico Eagle’s and Kirkland Lake Gold’s brand,
reputation and trust; environmental risks; safety and technology risks; changes in or enforcement
of national and local government legislation, taxation, cont rols or regulations and/or changes in
the administration of laws, policies and practices, expropriation or nationalization of property and
political or economic developments in Canada, the United States, Australia, Finland, Mexico ,
Colombia and other jurisdictions in which Agnico Eagle and Kirkland Lake Gold carry on business
or in which Agnico Eagle and Kirkland Lake Gold may carry on business in the future; lack of
certainty with respect to foreign legal systems, corruption and other factors that are inconsistent
with the rule of law; legal or regulatory developments and changes; the impact of foreign exchange
rates; pric ing pressures; and local and global pol itical and economic conditions. Readers are
cautioned not to place undue reliance on these forward-looking statements, which speak only as
of the date made. For a more detailed discussion of such risks and other facto rs that may affect
Agnico Eagle ’s and Kirkland Lake Gold ’s ability to achieve the expectations set forth in the
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forward-looking statements contained in this news release, see the AIF and MD&A of Agnico
Eagle and Kirkland Lake Gold , respectively, filed under their respective profiles on SEDAR at
www.sedar.com and included in Agnico Eagle’s and Kirkland Lake Gold ’s Form 40-F filed on
EDGAR at www.sec.gov, as well as Agnico Eagle’s and Kirkland Lake Gold’s other filings with
the Canadian securities regulators and the SEC. Other than as required by law, Agnico Eagle and
Kirkland Lake Gold do not intend, and do not assume any obligation, to update these forward -
looking statements.
Non-IFRS Measures
The information in this news release includes the following non -IFRS financial measures: all -in
sustaining costs per ounce of gold sold (“AISC”) and Adjusted EBITDA. These financial measures
do not have any standardized meaning prescribed by IFRS and are therefore unlikely to be
comparable to similar measures presented by other issuers, even as compared to other issuers
who may also be applying the World Gold Council ( “WGC”) guidelines, which can be found at
http://www.gold.org. Management of Agnico Eagle and Kirkland Lake Gold believe that the use
of these non -IFRS measures will assist analysts, investors and other stakeholders of th e
companies in understanding the costs associated with producing gold, understanding the
economics of gold mining, assessing the companies’ operating performance, the combined
company’s ability to generate free cash flow from current operations and to gene rate free cash
flow on an overall company basis, and for planning and forecasting of future periods. However,
AISC does have limitations as an analytical tool as it may be influenced by the point in the life
cycle of a specific mine and the level of additional exploration or expenditures a company has to
make to fully develop its properties. Accordingly, these non -IFRS measures should not be
considered in isolation, or as a substitute for, analysis of the companies; results as reported under
IFRS. A reconci liation of certain the non -IFRS measures presented in this news release is
contained in each of Agnico Eagle’s and Kirkland Lake Gold’s most recently filed annual MD&A,
which are available under their respective profiles on SEDAR at www.sedar.com.
Notes to Investors Regarding the Use of Mineral Reserves for Agnico Eagle
The mineral reserve estimates contained in this news release have been prepared in accordance
with the Canadian securities administrators' (the "CSA") National Instrument 43-101 Standards of
Disclosure for Mineral Projects ("NI 43-101"). These standards are similar to those used by SEC
Industry Guide No. 7, as interpreted by the SEC staff. However, the definitions in NI 43-101 differ
in certain respects from those under SEC Industry Guide 7. Accordingly, mineral reserve
information contained in this news release may not be comparable to similar information disclosed
by United States companies. Under the SEC's Industry Guide 7, minerali zation may not be
classified as a "reserve" unless the determination has been made that the mineralization could
be economically and legally produced or extracted at the time the reserve determination is made.
For United States reporting purposes, the SEC has adopted amendments to its disclosure rules
(the "SEC Modernization Rules") to modernize the mining property disclosure requirements for
issuers whose securities are registered with the SEC under the United States Securities
Exchange Act of 1934, as amended (the "Exchange Act"), which became effective February 25,
2019. The SEC Modernization Rules more closely align the SEC's disclosure requirements and
policies for mining properties with current industry and global regulatory practices and standards,
including NI 43 -101, and replace the historical property disclosure requirements for mining
registrants that were included in SEC Industry Guide 7. Issuers must begin to comply with the
SEC Modernization Rules in their first fiscal year beginning on or after January 1, 2021, though
Canadian issuers that report in the United States using the Multijurisdictional Disclosure System