Agnico Eagle Mines Limited
) rose around 0.7% during the trading session following the news
that it agreed to subscribe for 19,800,000 units of Pershimco
Resources Inc. in a private placement. The company's shares
eventually closed at $25.19, gaining around 0.2%.
Each unit subscribed comprises one common share and one common
share purchase warrant. Each share purchase warrant affixed with
each unit subscribed allows the holder to acquire one common
share of Pershimco at C$0.54 (or 51 cents) any time within two
years from the closing date.
The subscription is priced at C$0.47 per unit (or 44 cents). This
amounts to a total consideration of C$9,306,000 or ($8,764,780).
The proposed private placement is subject to regulatory approval
and other closing conditions. The private placement is expected
to close on or about Jan 10, 2014.
On closing of the private placement, Agnico Eagle will hold
19,800,000 common shares and same number of warrants. This
represents 9.9% of the issued and outstanding common shares on a
non-diluted basis and 18.1% of the common shares on a partially
Both the parties are anticipated to enter into an investor rights
agreement at the closing of the private placement. Under the
agreement, Agnico Eagle will acquire the right to appoint one
director. Moreover, if the numbers of directors is increased to
10 or more, the company can appoint one additional director.
The agreement will also bestow Agnico Eagle with a participation
right wherein it can take part in future equity financings of
Pershimco in order to maintain its proportionate ownership of the
latter at 9.9% on a non-diluted basis.
However, Agnico Eagle will not be allowed to use the
participation right if it owns more than 20% of the outstanding
common shares of Pershimco (on a non-diluted basis). It will also
not be allowed to exercise a warrant if and to the extent that,
after exercising the warrants, it gains more than 20% of the
outstanding common shares (on a non-diluted basis).
Moreover, Agnico Eagle will not be allowed to acquire more than
19.99% of the common shares (on a fully diluted basis) or to act
jointly or in concert with others in relation to the securities
of Pershimco for one year from the closing of the private
Agnico Eagle is acquiring the units of Pershimco in the form of
an investment. However, acquiring additional common shares or
other securities of Pershimco or disposing some or all of the
common shares or warrants will depend on market conditions.
Agnico-Eagle currently has a Zacks Rank #4 (Sell).
Better-ranked stocks in the gold mining industry include
Golden Star Resources, Ltd.
Pretium Resources Inc.
AngloGold Ashanti Ltd.
). While Golden Star Resources carries a Zacks Rank #1 (Strong
Buy), Pretium Resources and AngloGold Ashanti hold a Zacks Rank
AGNICO EAGLE (AEM): Free Stock Analysis
ANGLOGOLD LTD (AU): Free Stock Analysis
GOLDEN STAR RES (GSS): Free Stock Analysis
PRETIUM RES INC (PVG): Free Stock Analysis
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