De Grey Mining (ASX:DEG) on Friday denied reports published in a national masthead on Thursday that it’s received a takeover offer from Canada-based Agnico Eagle.
The ultimate thrust of that reporting alleges Agnico Eagle has been looking for an acquisition target; that such discussions with De Grey have possibly been going on since June, and, that confidentiality agreements already signed frame information around the potential offer.
Following the denial, shares in DEG jumped +3.73% to reflect a share price of $1.39 in lunchtime trades. But the language around that apparent denial has some market-watchers curious.
HotCopper users in the announcement thread were, on the whole, impressed by De Grey’s response, from a stock volatility point of view – but multiple users wondered if there wasn’t more to the story.
Namely, if there is indeed a takeover offer to be announced in the near future.
HotCopper users not convinced
“Perfect response I reckon. Professional governance, addresses the issue, but certainly doesn’t deny any interest,” user Wottagunn wrote.
Another user took speculation further and suggested that De Grey could, in fact, be negotiating with Agnico Eagle.
“The fact they called the article ‘incorrect’ and not ‘false’ is telling,” Mozz18 commented.
Perhaps the most forthcoming with their beliefs was user Gavsy who wrote: “So what they’re saying is they will give it a week or two and then announce the offer – they just didn’t want it leaked!!”
Time will tell.
De Grey and the Hemi deposit
De Grey Mining has long been a hot stock for ASX-watchers in the materials space, mainly because the company was responsible for upturning conventional lore surrounding WA’s mineral riches.
Striking the Hemi deposit in the Pilbara region back in late 2019, the company’s shares rocketed upwards – largely because of the scale of the find.
It was also sensational for another reason – up until then, conventional wisdom held all of north WA’s major-scale gold deposits had already been found, or at least, already staked.
For a state as ancient as expansive as WA – particularly its Pilbara region – this was, perhaps, always a view reflective of folly.
De Grey stocks reflect bullishness
Get this: on the 3rd of January 2020, DEG shares were worth 5cps.
By mid-September of 2020 – nine months later – shares were worth $1.53/sh, and the company’s shares have remained above $1.00, more or less, since.
This finance journalist remembers sharing one evening with an in-house De Grey Mining geologist in 2021 who was quite confident the share price could hit $2.00/s. While that never eventuated – at least yet – the market’s enthusiasm for the stock is clear.
De Grey is, today, a miner with a market cap of $3.3B. But it’s never been able to get shares higher than $1.66/sh back in April of 2023.
Who is Agnico Eagle?
So let’s ignore De Grey’s denial of the rumours on Thursday and take a look at Agnico Eagle.
NYSE-listed Agnico Eagle are a Canada-based miner who oversee Canada’s two largest producing gold mines – the Detour Lake project, and, the Malartic Mine, the latter of which Agnico jointly manages alongside Canada’s Yamana Gold on a 50/50 basis.
Worth noting here: Agnico and Pan American acquired Yamana back in March of 2023.
Agnico has a market cap of US$42.3B and its 1Y performance has delivered returns of +78.8%. Shares are worth US$84.08/sh as at 1pm Friday Sydney time.
The aforementioned report from a national masthead on Thursday alleging Agnico is circling De Grey asserted Agnico has been looking for a gold takeover target for a while, now.
Where that belief comes from isn’t entirely clear.
What is clear: with at least one team member on board at De Grey who believed the share price would hit $2/sh three years ago, and with De Grey posting a loss of nearly $20M in 1HCY24 – if there was going to be a buyout, it could make sense for De Grey to approve such a deal in the near term.
Especially given record gold prices.
DEG last traded at $1.39/sh.
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