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Alamos Gold To Purchase Richmont Mines

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Editor's Note: Updating earlier story to include more details, including requirement of shareholder approval and Richmont selling certain assets to Monarques Gold Corp.

(Kitco News) - Alamos Gold Inc. (TSX, NYSE: AGI) has agreed to acquire Richmont Mines Inc. (TSX, NYSE: RIC) in a “friendly” all-stock deal valued at $770 million, the two companies announced Monday.

Under the deal, Richmont stockholders will receive 1.385 Alamos common shares for each Richmont share. The exchange ratio implies a price of C$14.20 per Richmont share, based on the closing price of Alamos common shares on the Toronto Stock Exchange Friday.

The companies said this represents a 22% premium to Richmont's closing price and a 32% premium based on both companies' 20-day volume-weighted average prices, both as of Friday on the Toronto Stock Exchange. Upon completion of the transaction, existing Alamos and Richmont shareholders will own approximately 77% and 23% of the new company, respectively, officials said.

The new company is expected to produce 500,000 ounces of gold this year, anchored by three mines in Mexico and Canada, officials added. Alamos will be acquiring Richmont’s flagship Island Gold Mine. The company said the deal will make Alamos a top 10 gold producer in North America, with nearly 60% of its production in the mining-friendly nation of Canada.

"The Island Gold Mine is a high-quality asset in every respect,” said John McCluskey, president and chief executive officer of Alamos Gold. “We see excellent potential for reserve and production growth from one of the highest-grade, lowest-cost gold mines in Canada.”

Renaud Adams, president and chief executive officer of Richmont, said the deal continues Richmont’s commitment to create value for shareholders. “Our shareholders will maintain exposure to the potential of the Island Gold Mine, which is now firmly established as one of the lowest-cost operations in the Americas,” Adams added.

The deal requires approval from two-thirds of the votes cast by Richmont shareholders and majority approval of the votes cast by Alamos shareholders. Both companies are planning to hold special meetings in November. The board of directors of each company has recommended shareholders vote in favor of the transaction, the companies said.

In conjunction with the Alamos deal, Richmont also reported another agreement for the sale of several Quebec properties to Monarques Gold Corp. (TSXV: MQR). This includes the Beaufor Mine, the Camflo mill and the Wasamac development project. The transaction is expected to occur around end of the month, Richmont said.

Richmont subscribed for approximately C$2 million of “subscription receipts” from Monarques, with each to be automatically exchanged for one common share of Monarques upon the closing of the transaction. In addition, Monarques will issue additional shares so that Richmont ultimately holds 19.9% of Monarques shares.

Under the deal, Monarques also will grant Richmont 1% net-smelter-return royalties on the Beaufor Mine, once post-closing production reaches 100,000 ounces of gold, and for Richmont’s interest in the Camflo mineral claims. Also, Richmont will receive a 1.5% NSR on the Wasamac property, although there is a buyback provision.

Disclaimer: The views expressed in this article are those of the author and may not reflect those of Kitco Metals Inc. The author has made every effort to ensure accuracy of information provided; however, neither Kitco Metals Inc. nor the author can guarantee such accuracy. This article is strictly for informational purposes only. It is not a solicitation to make any exchange in commodities, securities or other financial instruments. Kitco Metals Inc. and the author of this article do not accept culpability for losses and/ or damages arising from the use of this publication.

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