Alamos Gold Inc. announced this morning that they will acquire all of the issued and outstanding shares of Richmont pursuant to a plan of arrangement.
Under the terms of the Agreement, all of the Richmont issued and outstanding common shares will be exchanged on the basis of 1.385 Alamos common shares for each Richmont common share. The Exchange Ratio implies consideration of C$14.20 per Richmont common share, based on the closing price of Alamos common shares on the Toronto Stock Exchange (“TSX”) on September 8, 2017. 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 at September 8, 2017 on the TSX. This implies a total equity value of approximately US$770 million on a fully diluted in-the-money basis and an enterprise value of US$683 million.
Upon completion of the Transaction, existing Alamos and Richmont shareholders will own approximately 77% and 23% of the pro forma company, respectively.
John McCluskey, President and CEO of Alamos, stated: “Our combination with Richmont reflects our core strategy of creating long term value through operating high quality assets. The Island Gold Mine is a high quality asset in every respect. We see excellent potential for reserve and production growth from one of the highest grade, lowest cost gold mines in Canada. With this production base, growth, and balance sheet strength, Alamos will be the leading intermediate producer and presents a compelling revaluation opportunity for both Alamos and Richmont shareholders.”
Renaud Adams, President and CEO of Richmont, stated: “Over the past three years, Richmont has delivered on its commitment to create value for our shareholders through our disciplined approach to growing production and reducing costs at the Island Gold Mine. This transaction builds on that commitment as our shareholders will benefit from having meaningful ownership in a diversified intermediate producer with a portfolio of high-quality assets and a proven and experienced management team that shares our commitment to creating long-term sustainable value. 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.”The proposed Transaction will be completed pursuant to a plan of arrangement completed under the Business Corporations Act (Quebec). The Transaction will require approval by 66 2/3 percent of the votes cast by the shareholders of Richmont at a special meeting of Richmont shareholders expected to be held in November 2017. The issuance of shares by Alamos pursuant to the Transaction is also subject to approval by the majority of the votes cast by the shareholders of Alamos at a special meeting of Alamos shareholders expected to be held in November 2017 with the transaction expected to close mid-November 2017. The directors and senior officers of Richmont and Alamos have entered into voting support agreements, pursuant to which they will vote their common shares held in favour of the Transaction.
In addition to shareholder and court approvals, this is subject to applicable regulatory approvals and the satisfaction of certain other closing conditions customary for a transaction of this nature. The Agreement has been unanimously approved by the Boards of Directors of Alamos and Richmont, and each board recommends that their respective shareholders vote in favor.