Alamos Gold to Acquire Argonaut Gold

Alamos Gold and Argonaut Gold have entered into a definitive agreement for Alamos to acquire Argonaut Gold. Upon completion, this transaction would make Alamos Gold the third-largest gold producer in Canada.

Alamos Gold announced it agreed to acquire all of Argonaut Gold’s issued and outstanding shares. This acquisition includes Argonaut’s Magino mine, located next to Alamos’ Island Gold mine in Ontario, Canada. The integration of these two operations is expected to create one of Canada’s largest and lowest-cost gold mines, with estimated synergies totaling approximately US$515 million. 

The addition of Magino is projected to increase Alamos’ combined gold production to over 600,000oz/y, with long-term potential exceeding 900,000oz/y, enhancing its position as a leading Canadian-focused intermediate producer. “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 reserves and resource bases, long mine lives, and existing infrastructure that can support the bright future for the larger combined operation,” said John McCluskey, President and CEO, Alamos Gold.

As part of the transaction, Argonaut’s assets in the United States and Mexico will be spun out to its existing shareholders as a newly created junior gold producer, called SpinCo. SpinCo will own the Florida Canyon mine in the United States, as well as the El Castillo Complex, the La Colorada mine, and the Cerro del Gallo project in Mexico.

Under the terms of the agreement, each Argonaut common share outstanding will be exchanged for 0.0185 Alamos common shares and 1 share of SpinCo. This implies a total consideration of approximately US$0.40 per Argonaut common share, or US$325 million, representing a 34% premium based on closing prices on March 26, 2024, and a 41% premium based on both companies’ 20-day volume-weighted average prices.

With 88% of its net asset value supported by Canadian assets, the combined company solidifies Alamos' position as the third-largest gold producer in Canada. Furthermore, the high concentration of assets in Canada reduces Alamos Gold’s exposure to political risks.

Richard Young, President and CEO, Argonaut Gold, said the transaction provides a unique opportunity to place Magino in the hands of a well-capitalized company, which will be able to realize significant synergies given the proximity to the adjacent Island Gold Mine. “We believe that with adequate capital and an optimal expansion at Magino, the mine will deliver significant value to all stakeholders. We are grateful to our team at Magino for their significant contribution and hard work during the mine and mill ramp-up. Similarly, we thank our exceptional teams in Mexico and Nevada for their continued hard work throughout the years,” Young added. 

The completion of the transaction is contingent upon receiving approvals from shareholders, the court, and regulatory bodies, as well as meeting other standard closing conditions. Following completion, existing Alamos shareholders will hold approximately 95% of the pro forma company, with Argonaut shareholders owning the remaining 5%.