Cartier Resources Inc. (TSXV:ECR, Financial) announced Monday that Agnico Eagle Mines Ltd. (AEM, Financial) will buy approximately 19.97% of the company's issued and outstanding common shares. This represents 22.5 million ordinary shares. Agnico Eagle will pay 20 cents per share for a total of $4.5 million.
Cartier's shares will be sold directly to Agnico Eagle through a non-public offering.
The purchasing agreement gives Agnico Eagle Mines some rights. The Toronto-based gold producer will "have the right to participate in certain equity financings by Cartier" to maintain its interest and can nominate members to the board of directors. The miner is limited in that it cannot acquire more thatn 19.99% of shares for two years.
Cartier Resources is a Canadian gold exploration company that is working on several gold, silver and copper projects in the Abitibi Gold Belt in Quebec.
The company is listed on the TSX Venture Exchange. Yesterday, the stock closed at 19 cents (Canadian) (14 cents U.S.) with 596,963 shares traded on the stock market. The 52-week range is between six cents and 21 cents. The stock is more volatile than the stock market with a beta of 2.21.
The company has a market capitalization of 17.13 million Canadian dollars ($12.8 million) and approximately 90.14 million shares outstanding, of which 85.66 million shares can be traded.
Cartier Resources had approximately CA$1.09 million in cash on hand as of the most recent quarter.
The EuroPac Gold Fund, a top mutual fund holder, holds 703,500 shares of Cartier, which represents 0.8% of the total shares outstanding, for a total value of CA$105,525.
The transaction is part of Agnico Eagle's strategy to increase the quality of its asset base through the mergers and acquisitions of those exploration companies that hold metal projects with the best growth potential.
The miner already relies on a respectable asset base that has the potential to drive production growth. It is one of the best in the industry.
Yesterday, Agnico Eagle closed at $37.76 per share, down 34 cents or 0.89% from the previous trading day. A volume of 1,442,588 shares were traded yesterday on the New York Stock Exchange.
The gold stock has gained 43.68% year to date and is trading at 1.90 times its book value and 9.87 times its Ebitda.
During the third quarter, Mario Gabelli (Trades, Portfolio) increased his position in Agnico Eagle Mines by 3.13%. Arnold Van Den Berg, First Eagle Investment and Ron Baron (Trades, Portfolio) reduced their positions by 13.23%, 9.88% and 28.57%.
Disclosure: I have no position in Agnico Eagle Mines Ltd. or Cartier Resources Inc.
Start a free 7-day trial of Premium Membership to GuruFocus.
