The combined company is expected to have a reserve base of 48 million ounces of gold and an extensive pipeline of development and exploration projects, the miners said on Tuesday.

Merger activity in the gold industry is bouncing back from a pandemic-induced lull. Earlier in the month, South African miner AngloGold Ashanti agreed to buy out Canadian-listed Corvus Gold in a deal valuing the exploration firm at C$570 million.

Kirkland Lake Gold shareholders will receive 0.7935 of an Agnico Eagle common share for each stock held, or C$50.63 based on Agnico's Monday close, according to Reuters calculation. This represents a discount of 9% to Kirkland's last close.

Shares of Kirland Lake fell to C$50.84 while Agnico's stock was down 2.01% at C$62.53

Kirkland Lake Gold's Tony Makuch will be the chief executive of the combined company, while Agnico's top boss Sean Boyd will become the executive chair.

The companies have good assets in safe jurisdictions, successful track records and the combined entity will be a larger, more liquid for generalist investors who want exposure to the gold industry, said Adam Josephson of KeyBanc Capital Markets.

"There was recent industry discussion about other potential suitors for Kirkland, which we believe may have played a role in the timing of this announcement/transaction," he added.

Upon closing, expected in December or in the first quarter of 2022, Agnico will own about 54% of the combined company.

The combined entity also aims to reduce greenhouse gas emissions intensity to net zero by 2050 or earlier.

($1 = 1.2652 Canadian dollars)

(Reporting by Sahil Shaw and Arunima Kumar in Bengaluru; Editing by Anil D'Silva)