As part of the Transaction, Alamos will acquire Argonaut’s Magino mine, located adjacent to its Island Gold mine in
Concurrently with the Transaction, Argonaut’s assets in
Under the terms of the Agreement, each Argonaut common share outstanding will be exchanged for 0.0185 Alamos common shares and 1 share of
Upon completion of the Transaction, existing Alamos and Argonaut shareholders will own approximately 95% and 5% of the pro forma company, respectively.
Transaction Highlights
- Creation of one of Canada’s largest, lowest cost and most profitable gold mines – combined Magino and Island Gold mines are expected to produce approximately 280,000 ounces in 20244, and increase to over 400,000 ounces per year at first quartile costs, following the completion of the Phase 3+ Expansion in 2026. The two deposits contain Mineral Reserves of 4.1 million ounces, and total Mineral Reserves and Resources of 11.5 million ounces supporting a mine life of more than 19 years5, with significant exploration upside
- Immediate value creation – the combination of Island Gold and Magino is expected to unlock pre-tax synergies of approximately
US$515 million 1 over the life of mine. This includes operating synergies ofUS$375 million , through the use of the larger centralized mill and tailings facility at Magino, and capital savings ofUS$140 million with the mill and tailings expansions at Island Gold no longer required - Enhances position as a leading intermediate gold producer – combined near-term gold production is expected to increase approximately 25% to over 600,000 ounces per year4, with longer term growth potential to over 900,000 ounces per year, at declining costs
- Leading Canadian exposure supporting a low political risk profile – with 88% of the combined Company’s net asset value6 supported by its Canadian assets, solidifying Alamos’ position as the 3rd largest gold producer in
Canada - Longer-term upside potential – significant further upside potential at both Magino and Island Gold through an expansion of a single optimized milling complex at Magino
- Stronger financial capacity – to complete the ramp up and optimization of the Magino mine, unlocking the full potential of the operation. Stronger overall cash flow generation to support portfolio of organic growth projects, including the Phase 3+ Expansion at Island Gold, and
Lynn Lake
“This is a logical and attractive transaction for both companies. The combination of 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. 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
“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, who will be able to realize significant synergies given the proximity of the adjacent
Benefits to Alamos Shareholders
- Operating and capital synergies of
US$515 million 1 through the integration of Island Gold and Magino - Larger, established mill and tailings infrastructure at Magino to accommodate the rapidly growing Mineral Reserve and Resource base at Island Gold
- Enhanced near and longer-term growth profile with production increasing to over 600,000 ounces per year4, and longer-term potential of 900,000 ounces per year
- Further production upside potential through the optimization and expansion of the Magino – Island Gold complex
- Strengthens core portfolio with addition of a fourth core, long-life producing mine with a large Mineral Reserve and Resource base, and exploration upside
- Accretive across key financial and operational per share metrics including net asset value, cash flow, production and Mineral Reserves
- Expands upon leading exposure to
Canada with 88% of net asset value6 supported by Canadian assets - Stronger operating cash flow to support organic growth projects including the Phase 3+ Expansion at Island Gold, and the
Lynn Lake project
Benefits to Argonaut Shareholders
- Significant premium of approximately 41% based on the 20-day volume-weighted average prices of both companies
- Ongoing participation in the substantial synergies generated from the integration of Island Gold and Magino
- Exposure to Alamos’ high quality portfolio of assets, including diversified North American gold production and strong growth profile
- Enhanced financial capacity to complete ramp up and optimization of the Magino mine
- Maintain exposure to Magino’s operating and exploration upside potential
- Significantly enhanced capital markets exposure and trading liquidity
- Provides ongoing return of capital for shareholders through participation in Alamos’ quarterly dividend
- Ownership of
SpinCo providing continued exposure to Argonaut’s operating and exploration upside potential within itsUnited States and Mexican assets
Private Placement Transaction
In connection with the Transaction, Alamos has agreed to provide Argonaut with a private placement equity financing in the amount of
Transaction Summary
The proposed Transaction will be completed pursuant to a plan of arrangement completed under the Business Corporations Act (
In addition to shareholder and court approvals, the Transaction is subject to applicable regulatory approvals and the satisfaction of certain other closing conditions customary for a transaction of this nature. The Arrangement Agreement includes customary deal protections, including fiduciary-out provisions, non-solicitation covenants, and the right to match any superior proposals. Additionally, a break fee in an amount of
Full details of the Transaction will be included in the meeting materials which are expected to be mailed to Argonaut shareholders in
Voting Support Agreements
Argonaut’s two largest shareholders, representing approximately 40% of Argonaut’s common shares outstanding, have entered into lock-up agreements in support of the Transaction.
Boards of Directors’ Recommendations
The Agreement has been unanimously approved by the Boards of Directors of Alamos and Argonaut, and Argonaut’s board recommends that their shareholders vote in favor of the Transaction.
The Board of Directors of Argonaut has received an opinion from
Advisors and Counsel
Scotiabank is acting as financial advisor to Argonaut and its Board of Directors.
Conference Call and Webcast
Alamos and Argonaut will host a joint conference call and webcast on
- Local and international: 1-800-319-4610
- Toronto Local: 1-416-915-3239
A live webcast of the conference call will be available at www.alamosgold.com or www.argonautgold.com.
A replay of this conference call will be available until
- Local and international: 1-855-669-9658
- Replay passcode: 0778
An archived version of the webcast will be available at www.alamosgold.com or www.argonautgold.com.
About
Alamos is a Canadian-based intermediate gold producer with diversified production from three operating mines in
For further information please visit the Alamos and Argonaut websites at www.alamosgold.com or www.argonautgold.com or contact:
Senior Vice-President, Investor Relations 416-368-9932 x 5439 sparsons@alamosgold.com | Investor Relations 416-575-6965 joanna.longo@argonautgold.com |
Technical Information
Alamos Cautionary Statement
This News Release contains “forward-looking information” and “forward-looking statements” as those terms are defined under applicable Canadian and
Such statements in this News Release include (without limitation) information, statements, predictions, assumptions and expectations pertaining to: the receipt of court and regulatory approvals for the Transaction; completion of the acquisition of Argonaut by Alamos; benefits and advantages of the Transaction; synergies to be created by the integration of the Island Gold mine and the Magino mine including but not limited to the use of shared infrastructure and the unlocking of significant value; increased gold production and long term production potential; cash flow generation; declining cost profile of Alamos; size and profitability of the combined Island Gold and Magino mines; the creation of
Alamos cautions that forward looking statements are necessarily based upon a number of factors that, while considered reasonable by management at the time of making such statements, are inherently subject to significant business, economic, technical, legal, political, and competitive uncertainties, and contingencies. Known and unknown factors could cause actual results to differ materially from those projected in the forward-looking statements and undue reliance should not be placed on such statements and information.
Risk factors that may affect the ability to achieve the expectations set forth in the forward-looking statements in this News Release include, but are not limited to: not receiving the requisite approvals for completion of the Transaction; anticipated production estimates and production growth rates assume accuracy of projected ore grade, mining rates, recovery timing and recovery rate estimates and may be impacted by unscheduled maintenance, labour and contractor availability; anticipated capital expenditures and other cash costs assume foreign exchange rates and accuracy of production estimates, and may be impacted by unexpected maintenance, the need to hire external resources and accelerated capital plans; expected profits and free cash flow assume production and expenditure estimates and may be impacted by gold prices, production estimates, and the timing of payments; reserves and resources, which are forward-looking statements by their nature, involve implied assessment and may be impacted by metal prices, future drilling results, operating costs, mining recoveries and dilution rates. Other factors include ongoing permitting requirements and risks in obtaining and maintaining necessary licences, permits and authorizations for development stage and operating assets; the ability to work with local populations; employee and community relations; the actual results of current and future exploration activities; conclusions of economic evaluations and changes in project parameters as plans continue to be refined; future prices of gold; the speculative nature of mineral exploration and development; fluctuations in the price of commodities such as diesel fuel, natural gas and electricity; the impact of litigation and administrative proceedings and any resulting court, arbitral and/or administrative decisions; disruptions affecting operations; risks associated with the startup of new mines; delays in or with the Phase 3+ Expansion at Island Gold; construction decisions and any development of the
For a more detailed discussion of other risk factors that may affect Alamos’ ability to achieve the expectations set forth in the forward-looking statements in this News Release, see Alamos’ latest 40-F/Annual Information Form and Management’s Discussion and Analysis, each under the heading “Risk Factors”, available on the SEDAR+ website at www.sedarplus.ca or on EDGAR at www.sec.gov, which should be reviewed in conjunction with the information, risk factors and assumptions found in this News Release.
Alamos disclaims any intention or obligation to update or revise any forward-looking statements whether as a result of new information, future events or otherwise, except as required by applicable law.
Alamos Cautionary Note to U.S. Investors
All references to Resource and Reserve estimates included in this News Release are made in accordance with Canadian National Instrument 43-101 - Standards of Disclosure for Mineral Projects (“NI 43-101”) and the
Investors are cautioned that while the above terms are “substantially similar” to CIM Definitions, there are differences in the definitions under Regulation S-K 1300 and the CIM Standards. Accordingly, there is no assurance any Mineral Reserves or Mineral Resources that may be reported as “Proven Mineral Reserves”, “Probable Mineral Reserves”, “Measured Mineral Resources”, “Indicated Mineral Resources” and “Inferred Mineral Resources” under NI 43-101 would be the same had the Mineral Reserve or Mineral Resource estimates been prepared under the standards adopted under Regulation S-K 1300. U.S. investors are also cautioned that while the
Argonaut Cautionary Statement
Certain information contained or incorporated by reference in this press release, including any information as to our strategy, projects or future financial or operating performance, constitutes “forward-looking statements”. Forward-looking statements are frequently characterized by words such as “estimate”, “plan”, “anticipate”, “expect”, “intend”, “believe(s)”, “potential”, or statements that certain events or conditions “may”, “should” or “will” occur, and similar expressions. This press release contains forward-looking statements and forward-looking information including, but not limited to: the timing and ability to refinance the existing term loan, the results of independent engineer technical reviews, the estimation of the Mineral Reserves and Resources, the realization of Mineral Reserve and Resource estimates, expected capital expenditures, costs and timing of development of new deposits, success of exploration activities and permitting requirements.
Forward-looking statements are based on a number of assumptions, opinions and estimates, including estimates and assumptions in regards to the factors listed below that, while considered reasonable by the Company as at the date of this press release based on management’s experience and assessment of current conditions and anticipated developments, are inherently subject to significant business, economic and competitive uncertainties and contingencies. Many of these assumptions are based on factors and events that are not within the control of Argonaut and there is no assurance they will prove to be correct. Known and unknown factors could cause actual results to differ materially from those projected in the forward-looking statements and undue reliance should not be placed on such statements and information. Such factors include, but are not limited to: the Company’s ability to continue as a going concern, satisfying the conditions precedent for further draws on the Loan Facilities, satisfying ongoing covenants under the Loan Facilities, results of independent engineer technical reviews, the availability and change in terms of financing, the possibility of cost overruns and unanticipated costs and expenses, the ability of the Magino mine to be one of the largest and lowest cost gold mines, the winding down of the Mexican mines, the impact of inflation on costs of exploration, development and production, risk of employee and/or contractor strike actions, the future price of gold and silver, the estimation of the Mineral Reserves and Resources, the realization of Mineral Reserve and Resource estimates, the timing and amount of estimated future production at the Magino mine,
These factors are discussed in greater detail in the Argonaut's most recent Annual Information Form dated
Forward-looking statements included in this press release speak only as of the date of this press release. Although Argonaut has attempted to identify important factors that could cause actual actions, events or results to differ materially from those described in forward-looking statements, there may be other factors that cause actions, events or results not to be anticipated, estimated or intended. There can be no assurance that forward-looking statements will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. Argonaut undertakes no obligation to update forward-looking statements if circumstances or management’s estimates or opinions should change except as required by applicable securities laws.
Endnotes:
(1) Synergies are pre-tax and undiscounted. On a discounted basis, this represents an after-tax net present value of
(2) Shares issued in
(3) Based on consensus analyst estimates for the underlying assets and comparable peer market multiples
(4) Based on the midpoint of Alamos’ and Argonaut’s 2024 production guidance
(5) Island Gold mine life based on 2023 Mineral Reserves and Resources assuming Phase 3+ Expansion Study Mineral Resource conversion rate. See Mineral Reserve & Resource estimates and associated footnotes in press release dated
(6) Based on consensus analyst net asset value estimates for mining assets
The TSX and NYSE have not reviewed and do not accept responsibility for the adequacy or accuracy of this release. No stock exchange, securities commission or other regulatory authority has approved or disapproved the information contained herein.
Source:
2024 GlobeNewswire, Inc., source