The integration of Alamos' Island Gold mine (pictured) and Argonaut's Magino mine will create synergies of $515-million.
Canadian miner Alamos Gold has announced its acquisition of smaller rival Argonaut in an all-stock deal valued at $325-million. The move is poised to create a gold miner with a combined long-term production potential exceeding 900 000 oz/y.
Central to the transaction is Alamos’ acquisition of Argonaut’s Magino mine, which is strategically located adjacent to its own Island Gold mine, in Ontario.
“Both assets complement each other well with large mineral reserve and resource bases, long mine lives, and existing infrastructure that can support the bright future for the larger combined operation. Together, Island Gold and Magino will create one of the largest and most profitable mines in Canada,” said Alamos president and CEO John McCluskey.
Anticipated synergies from the integration of the two operations are expected to total a substantial $515-million.
Moreover, the addition of Magino to Alamos’ portfolio is projected to significantly ramp up the company’s gold production to more than 600 000 oz/y by 2026.
Simultaneous to the transaction, Argonaut’s assets in the US and Mexico will be spun out to its existing shareholders, forming a newly established junior gold producer. The spin-off will hold key assets, including the Florida Canyon mine, in the US, as well as the El Castillo Complex, the La Colorada operation and the Cerro del Gallo project, in Mexico.
Under the terms of the deal, each Argonaut common share outstanding will be exchanged for 0.0185 Alamos common shares and one share of SpinCo. The exchange ratio implies estimated total consideration of C$0.40 an Argonaut common share, which is a 34% premium based on Argonaut’s and Alamos’ closing prices on March 26 on the TSX.