Alamos Gold Inc. (AGI) announced on Wednesday that it has agreed to acquire all of the issued and outstanding shares of Argonaut Gold Inc., including its Magino mine located near Alamos' Island Gold mine in Ontario, Canada.
This merger is expected to result in one of Canada's largest and most cost-effective gold mines.
By leveraging shared infrastructure, Alamos anticipates unlocking considerable value with projected synergies totaling around $515 million. The addition of Magino is forecasted to boost Alamos' total gold production to over 600,000 ounces annually.
Simultaneously, Argonaut's assets in the United States and Mexico will be transitioned to its existing shareholders as a new junior gold producer called SpinCo, which will possess the Florida Canyon mine in the United States, as well as the El Castillo Complex, the La Colorada operation, and the Cerro del Gallo project in Mexico.
Upon SpinCo's public debut, Alamos has committed to invest an additional $10 million to acquire a 19.9 percent stake in SpinCo.
According to the Agreement, each outstanding Argonaut common share will be exchanged for 0.0185 Alamos common shares and 1 share of SpinCo.
Following the completion of the transaction, the pro forma company will be owned approximately 95 percent by existing Alamos shareholders and 5 percent by former Argonaut shareholders.
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