DBRS Morningstar Places Agnico Eagle Mines Limited Under Review with Positive Implications Following Announcement of Potential Kirkland Lake Gold Limited Merger

DBRS Limited (DBRS Morningstar) placed the BBB Issuer Rating and Senior Unsecured Notes rating of Agnico Eagle Mines Limited (Agnico or the Company) Under Review with Positive Implications. Placing Agnico’s ratings Under Review follows Agnico’s September 28, 2021, announcement of a planned merger with Kirkland Lake Gold Limited (Kirkland Lake) in an all-equity transaction whereby each share of Kirkland Lake would be exchanged for 0.7935 of an Agnico Eagle common share. The market equity value of the combined company is approximately $24 billion. Kirkland Lake is a Canadian- and Australian-focused gold producer that produced approximately 1.4 million ounces of gold in 2020.

DBRS Morningstar notes that as at June 30, 2021, Kirkland Lake had approximately $25 million in operating and financial lease obligations with no long-term debt, and in the last 12 months ended June 30, 2021, generated cash flow from operations (before noncash working capital items) and EBITDA of approximately $1,428 million and $1,779 million, respectively. Because of Kirkland Lake’s low levels of debt, accretive cash flow, and EBITDA, plus the material increase in size of the combined entity, DBRS Morningstar views the proposed transaction as credit positive for Agnico. The proposed transaction is subject to approval by both Agnico and Kirkland Lake shareholders, regulatory approvals, and customary closing conditions and is expected to close in December 2021, or the first quarter of 2022. DBRS Morningstar anticipates it will resolve the Under Review status by the closing of the transaction.

ESG CONSIDERATIONS
A description of how DBRS Morningstar considers ESG factors within the DBRS Morningstar analytical framework can be found in the DBRS Morningstar Criteria: Approach to Environmental, Social, and Governance Risk Factors in Credit Ratings at https://www.dbrsmorningstar.com/research/373262.

Notes:
All figures are in U.S. dollars unless otherwise noted.

The principal methodology is Rating Companies in the Mining Industry (August 16, 2021; https://www.dbrsmorningstar.com/research/383106), which can be found on dbrsmorningstar.com under Methodologies & Criteria. Other applicable methodologies include the DBRS Morningstar Criteria: Approach to Environmental, Social, and Governance Risk Factors in Credit Ratings (February 3, 2021; https://www.dbrsmorningstar.com/research/373262).

For more information regarding rating methodologies and Coronavirus Disease (COVID-19), please see the following DBRS Morningstar press release: https://www.dbrsmorningstar.com/research/357883.

The related regulatory disclosures pursuant to the National Instrument 25-101 Designated Rating Organizations are hereby incorporated by reference and can be found by clicking on the link under Related Documents or by contacting us at info@dbrsmorningstar.com.

The rated entity or its related entities did participate in the rating process for this rating action. DBRS Morningstar had access to the accounts and other relevant internal documents of the rated entity or its related entities in connection with this rating action.

For more information on this credit or on this industry, visit www.dbrsmorningstar.com or contact us at info@dbrsmorningstar.com.

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