ATAC's drill cores from its Rackla gold project, Yukon.

ATAC's drill cores from its Rackla gold project, Yukon.

Agnico-Eagle on the Attack in Canada's Yukon

Issue 35, March 2013

Agnico-Eagle Mines, Canada’s fourth largest gold miner by output, has paid C$13m ($13m) for an 8.5 per cent stake in explorer ATAC Resources. “They’ve been following us for the last three years,” says ATAC chief executive Graham Downs. “We’ve kept them informed of what’s going on and they’ve kept up to speed on the project.”

ATAC owns the 1,600 sq km Rackla project, Yukon, covering Canada’s only Carlin-type gold trend. Characterised by fine sediment-hosted gold (invisible to the eye and therefore improbable to find) such deposits are typically large, high grade and found in clusters.

Mr. Downs describes the financing, which includes warrants that could lift Agnico’s ownership above 12 per cent, as “industry vetting of the project. It’s a complete endorsement.” The transaction leaves ATAC with cash of C$27m ($26m), funding its exploration plans for “multiple years.”

It also typifies an exploration and acquisition strategy that has differentiated Agnico-Eagle Mines from many other gold majors, which have tended to effectively outsource their greenfield drilling by waiting for juniors to largely define a resource, before buying the company outright.

Instead, Agnico has pursued more of a partnership model, buying equity stakes in juniors at an early stage, often alongside interests in their underlying projects. A similar strategy has been followed by copper miner HudBay Minerals, whose chief executive joined from Agnico in July 2010.

Largely focused on northern Canada, the approach has gained Agnico’s shareholders valuable footholds in emerging deposits, including its 8.1m gold ounce Meliadine project in Nunavut, initially bought into through a minority stake in junior Comaplex Minerals.

“I would expect that if we have continued exploration success, they would want to maintain ownership,” Downs says, emphasising that any deepening of ties is likely to be “results driven.”

Agnico also has stakes in Ontario’s Rubicon Minerals and Mexico’s Colibri Resources. Contiguous to its Lapa gold mine, Quebec, it also has a joint-venture with tightly held prospect generator Midland Exploration.

ATAC Resources rose 2.3 per cent on the news to C$1.36, before retracing gains. Agnico was flat.

“They’ve been following us for the last three years.”

RELATED NEWS

Champion Iron
Holding Talks with ArcelorMittal

Former Glencore boss Michael O'Keeffe denies seeking access to Arcelor's Cartier Railway

............................................

Goldcorp's Eleonore
Set for Resource
Expansion

New gold shoot positions Eleonore to become Canada's largest gold mine

............................................

Klondex Mines:
Nevada's Newest Gold Producer

Newmont deal launches Klondex into gold production of 120,000 ounces per annum

............................................

Loeb-Aron-&-Co..jpeg
Hallgarten-&-Co..png

............................................

Franco-Nevada Calls
for Syndicated Royalty Deals

Now is the time to buy assets says Franco's David Harquail,
with cash of $840m

Bold Gold Deals
Move Increasingly
Into the Money

Klondex, Franco & Silver
Standard all move to capitalise
on bullion's cycle