Proactive Investors - Alamos Gold Inc (TSX:TSX:AGI, NYSE:AGI) announced that it will be acquiring Argonaut Gold Inc (TSX:AR) in a US$325 million all-stock deal which will create one of the largest gold mines in Canada.
Alamos’ Island Gold Mine in Ontario is located next to Argonaut’s Magino mine.
The combination of the two operations is expected to result in synergies of US$515 million and increase Alamos’ combined production to more than 600,000 ounces per year. It sees longer-term potential production of 900,000 ounces per year.
Argonaut’s assets in the United States and Mexico will be spun out to its existing shareholders.
Alamos Gold CEO John McCluskey described the transaction as “logical and attractive” 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,” McCluskey said.
“Together, Island Gold and Magino will create one of the largest and most profitable mines in Canada, further enhancing our leading position as a Canadian-focused intermediate gold producer.”
Argonaut Gold CEO Richard Young said that, after considering a broad range of alternatives, management believes this deal provides a unique opportunity to place Magino in the hands of a well-capitalized and well-run company that will be able to realize significant synergies.
“We believe with adequate capital and an optimal expansion at Magino, the mine will deliver significant value to all stakeholders,” Young said.
Investors welcomed the annoucement, sending shares of Argonaut Gold up 30.7% to US$0.29 and Alamos Gold 5.6% higher to US$14.36.