Benzinga - by Stjepan Kalinic, Benzinga Staff Writer.
Alamos Gold (NYSE:AGI) is buying Argonaut Gold (OTCPK: ARNGF) in a deal valued at $325 million.
The transaction enhances Alamos as an intermediate gold producer at a time when the element has already seen multiple new all-time highs.
The acquisition involves Alamos acquiring all outstanding shares of Argonaut, a move that is expected to create one of Canada’s largest and most cost-effective gold mines.
One key is Argonaut’s Magino mine, which is situated near Alamos’ Island Gold mine in Ontario, Canada. This strategic proximity offers opportunities for synergies, the companies stated.
“This is a logical and attractive transaction for both companies. Combining the adjacent Island Gold and Magino mines will immediately unlock tremendous value, with significant longer-term upside through further optimizations of the combined operation and ongoing exploration success," said Alamos CEO John A. McCluskey.
Richard Young, President and CEO of Argonaut Gold, echoed McCluskey’s sentiments, emphasizing the benefits of the transaction for Argonaut’s stakeholders.
“After considering a broad range of alternatives, we believe this Transaction provides a unique opportunity to place Magino in the hands of a well-capitalized and well-run company,” Young remarked. “We believe with adequate capital and an optimal expansion at Magino, the mine will deliver significant value to all stakeholders.”
The deal structure involves Argonaut shareholders receiving 0.185 shares of Alamos and one share of a spinoff company for each Argonaut share held.
The spinoff will inherit Argonaut’s assets in the U.S. and Mexico, including the Florida Canyon mine, the El Castillo Complex, the La Colorada operation, and the Cerro del Gallo project.
Alamos will then concentrate on maximizing the potential of the combined Island Gold and Magino operations, with management quantifying long-term synergies of over $500 million.
Alamos produced 529,300 ounces of gold in 2023, but this acquisition could push the production past 600,000 ounces this year. Eventually, the management expects that number to reach 900,000.
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