Shares of Alamos Gold Inc. (AGI) gained over 6% on Wednesday after the company agreed to buy Argonaut Gold Inc., including its Magino mine located near Alamos' Island Gold mine in Ontario, Canada.
AGI is trading at $14.45, up $0.85 or 6.29%, on the NYSE. The stock opened its trading at $13.65 after closing Tuesday at $13.60. The stock has traded between $10.78 and $14.95 in the past 52-week period.
The company said the deal is expected to result in one of Canada's largest and most cost-effective gold mines.
Simultaneously, Argonaut's assets in the United States and Mexico will be transitioned to its existing shareholders as a new junior gold producer called SpinCo, which will possess 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 in Mexico.
Upon SpinCo's public debut, Alamos has committed to invest an additional $10 million to acquire a 19.9 percent stake in SpinCo.
According to the agreement, each outstanding Argonaut common share will be exchanged for 0.0185 Alamos common shares and 1 share of SpinCo.
Following the completion of the transaction, the pro forma company will be owned approximately 95 percent by existing Alamos shareholders and 5 percent by former Argonaut shareholders.
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