- Alamos Gold (NYSE:AGI) to buy all the issued and outstanding shares of Argonaut Gold (TSX:AR:CA) pursuant to a court approved plan of arrangement, the company said Wednesday, and the miner will also acquire the Magino mine, located adjacent to its Island Gold mine in Ontario, Canada.
- Concurrently with the transaction, Argonaut's assets in the United States and Mexico will be spun out to its existing shareholders as a newly created junior gold producer ("SpinCo"), which will own the Florida Canyon mine in the United States, as well as the El Castillo Complex, the La Colorada operation, and the Cerro del Gallo project, located in Mexico.
- Argonaut common share outstanding will be exchanged for 0.0185 Alamos common shares and 1 share of SpinCo.
- The Exchange Ratio implies estimated total consideration of C$0.40 per Argonaut common share, or $325 million. Total consideration includes C$0.34 of Alamos common shares, and SpinCo common shares with an estimated value of C$0.06.
- Alamos expects to issue approximately 20.3 million common shares as part of the transaction, representing an equity value of approximately $276 million on a fully diluted in-the-money basis, and an enterprise value of $516 million.
- Upon completion of the deal, Alamos and Argonaut shareholders will own approximately 95% and 5% of the pro forma company, respectively.
- The integration of the two operations is expected to create one of the largest and lowest cost gold mines in Canada, and Alamos expects to unlock significant value with immediate and long-term synergies expected to total approximately $515 million.
- The addition of Magino is expected to increase Alamos' combined gold production to over 600,000 ounces per year, with longer term production potential of over 900,000 ounces per year.
- Source: Press Release
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