Alamos Gold Acquires Argonaut Gold Amid Mining M&A Surge

The recent acquisition of Argonaut Gold by Alamos Gold not only signifies Alamos' transition to become Canada’s third-largest gold producer but also supports the strong trend of M&A activity that experts have forecasted over past years.

On Mar. 27, 2024, Alamos Gold and Argonaut Gold announced an agreement for Alamos to acquire all of Argonaut’s issued and outstanding shares. The deal, valued at over US$325 million, will also lead to the creation of a spin-off company called SpinCo. SpinCo will manage Argonaut Gold’s Mexican and US assets, including 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.

As for its Canadian operation, Alamos said that the addition of Argonaut’s Magino project has the potential to result in a combined gold production of over 600,000oz/y, with a long-term potential of 900,000oz/y. These numbers would make Alamos gold the third largest gold producer in Canada. “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.

In Mexico, Argonaut Gold had been facing challenges with its Mexican assets, as permitting for their development was halted. On Mar. 21, 2024, MBN reported that the lack of environmental permits had led Alamos Gold to consider selling its La Colorada mine, located in Sonora. In this scenario, Argonaut Gold considered that selling the project would be the best option, as a larger company could have the resources to sustain the operation until public policy regarding mining changes. Neither Argonaut nor Alamos disclosed the actions SpinCo would take regarding the specific case of La Colorada, nor did they provide a date for when the company would go public.

M&A Expeted to Gain Steam in 2024 

While the transaction is subject to approvals from shareholders, the court, and regulatory bodies, as well as meeting other standard closing conditions, it could be indicative of the increasing number of M&A transactions forecasted by experts for 2024.

According to Fitch Solutions, M&As marked 2023 due to a significant rise in transactions. According to the firm, this trend is expected to continue during 2024, highly fueled by the rise in demand for critical minerals, as markets are moving toward a deficit. “In the coming years, we expect mining and metals M&A activity to remain strong, in terms of both value and count, as miners continue seeking new growth opportunities within a challenging environment for the development of new projects,” the firm said, adding that these deals are part of companies’ strategy to avoid supply disruptions. 

While critical minerals like copper have garnered the most attention from investors, the firm highlights gold's role in M&As. In 2023, there were two significant gold M&A deals. First, Pan American Silver's acquisition of Yamana Gold, followed by Newmont's acquisition of Newcrest, which was the largest gold deal in mining history.