Alamos, AuRico to Merge Creating $1.5 Billion Gold Miner

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Canada’s Alamos Gold Inc. and AuRico Gold Inc. agreed to merge, creating a mining company with operations in Mexico and Canada and a market value of about $1.5 billion.

The deal is a so-called merger of equals, the Toronto-based companies said Monday in a joint statement. The current shareholders of Alamos and AuRico will each own about 50 percent of the new producer, whose board will comprise five directors from each company. The transaction is expected to close this quarter.

AuRico owns the Young-Davidson gold mine in northern Ontario and the El Chanate mine in Sonora State, Mexico. Alamos’s one operating mine is the Mulatos pit in Sonora. The new company will produce 375,000 ounces to 425,000 ounces of gold this year and has the potential to exceed 700,000 ounces annually, Alamos and AuRico said.

The merged producer, to be known as Alamos Gold, will have increased trading liquidity, better analyst coverage and a bigger profile in financial markets, the Toronto-based companies said. It will have a $427 million cash pile and expanding cash flow to support further growth.

The deal requires shareholder approval. Alamos investors will get 1 share of the new company and fraction of a cent for each of their shares. AuRico holders will get 0.5046 of a share of the new company.

As part of the transaction, the new company will spin off assets including AuRico’s Kemess underground mining project in British Columbia.

Alamos rose 6.6 percent to C$7.90 in Toronto while AuRico climbed 8.2 percent to C$4.09.

Alamos’s financial adviser is Maxit Capital LP and its legal counsel is Torys LLP. AuRico’s financial adviser is Scotiabank, its Canadian legal counsel is Fasken Martineau and its U.S. legal counsel is Paul Weiss.

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