AuRico Gold and Alamos Gold have agreed to a US $1.5-billion all-stock merger to create a new mid-tier producer with operations in Northern Ontario and Mexico.
The companies announced April 13 that they have signed a definitive agreement that being described as a “merger of equals.” AuRico brings its Young-Davidson Mine in Matachewan into the fold, while Alamos has its Mulatos mine in Sonora, Mexico.
Under the terms of the merger, AuRico Shareholder get 0.5046 shares in the new company for each of their shares while Alamos shareholder get one share for each of their new share.
A new company is being established to hold AuRico’s Kemess project in British Columbia, along with a net smelter royalty on Young-Davidson, and $20 million in cash.
The merger, which still needs shareholder and regulatory approval, is expected to close in the second quarter of this year.
John McCluskey, president-CEO of Alamos, said the company has been building its balance sheet for the right opportunity to come along.
“We believe the addition of the flagship, long-life Young-Davidson mine is just that opportunity. The combination of diversified production from three mines and a pipeline of low-cost growth projects in safe jurisdictions equate to a leading gold intermediate and a significant re-rate opportunity for our collective shareholders."
Scott Perry, AuRico president-CEO, said the merger with Alamos is a “logical business combination” that creates a quality intermediate gold producer with a diversified asset base of low-cost mines with significant growth potential and a slew of good development projects in the pipeline.
