that is the article. Speculationhas again surfaced about Agnico...

that is the article.

Speculationhas again surfaced about Agnico Eagle’s interest in De Grey Mining with theCanadian listed group said to have picked up the pace of gathering informationon the $2.6bn Western Australia gold miner.

DeGrey has been the subject of potential takeover activity for more than a year,but its recent $600m equity raising to fund the development of its lucrativeHemi gold deposit was thought to have put to rest any suggestion it wasembarking on any merger or acquisition talks.

Althoughsources close to the company argue that now would not be the time for a buyerto strike, others believe now is exactly the right time and a takeover makessense.

Ifanother miner wants to be involved in the project, 85km from Port Hedland, thebest time to buy De Grey is before project construction hits full steam so thatthey can assert control over the project’s direction – and the company is onlyon the cusp of doing that.

Multiplesources have reported heightened interest from Agnico of late, and onesuggestion is it had been carrying out a lot of work. The Canadian group hasbeen linked to the target as a suitor for at least a year.

ADe Grey Mining spokesman declined to comment when approached by DataRoom,although a company source has indicated it had not received any approaches.

DeGrey’s shares are cheaper than they were a year ago even though the gold pricehit a record in May of about $US2400 an ounce.

Itsmarket value is $2.6bn and shares price $1.07 after trading at a three-yearhigh at more than $1.60 in April.

Anybuyout proposal would create a major dilemma for Gold Road Resources, whichowns a 17.3 per cent stake.

Thestake is a valuable part of Gold Road, and a strategic Gold Road buyer ormerger partner such as Regis Resources would potentially be drawn to theopportunity to have a seat at the table over what happens to the sought-afterDe Grey.

Onepossibility is that Agnico Eagle buys both De Grey and the $1.8bn Gold Road.

There’sbeen suggestions that Northern Star may have some interest in De Grey in thefuture – but not yet – along with Barrick Gold and Gold Road itself, so there’splenty of potential candidates which could turn up at the negotiating table.

AgnicoEagle is a Canada-based gold producer that owns Fosterville mine, the largestproducer of gold in Victoria, Australia.

Itinherited the asset when it merged with Kirkland Lake Gold and it likes toacquire assets of scale.

DeGrey’s mining deposit is of a particularly high grade. The Hemi gold discoveryin Western Australia’s Pilbara, is capable of producing 10.6 million ounces ofgold with capital spending requirements of close to $1bn.

BridgitCarter @ The Australian