Alamos Gold to buy smaller peer Argonaut for $325 mln

By Reuters

March 27, 2024

March 27 (Reuters) - Canadian gold miner Alamos Gold (AGI.TO), opens new tab will acquire smaller rival Argonaut Gold (AR.TO), opens new tab for $325 million in an all-stock deal, the companies said on Wednesday.

The deal would increase Alamos' gold production to 600,000 ounces per year, with a longer-term production potential of over 900,000 ounces per year, the companies said. Alamos produced 529,300 ounces of gold in 2023.

The deal would give Alamos access to Argonaut's Magino mine, located adjacent to Alamos' Island Gold mine in Ontario, Canada.

The companies expect long-term synergies of about $515 million from the acquisition.

The companies will also spin off Argonaut's mines in the U.S. and Mexico to their existing shareholders as a newly created junior gold producer, SpinCo.

A junior gold miner is typically an exploration company with a smaller production capacity that searches for new deposits of gold.

Under the terms of the deal, each Argonaut common share would be exchanged for 0.0185 Alamos common shares and 1 share of SpinCo.

The exchange ratio implies a total consideration of 40 Canadian cents per Argonaut share, the companies said.

Gold prices hit a record high last week after Fed policymakers indicated they still expect to reduce interest rates by three-quarters of a percentage point by the end of the year.

U.S.-listed shares of Alamos edged lower before the bell.

Reporting by Sourasis Bose in Bengaluru; Editing by Tasim Zahid