Alamos Gold (Island Gold) Announces Friendly Acquisition of Argonaut Gold (Magino)

Alamos Gold Inc. and Argonaut Gold Inc. are pleased to announce that they have entered into a definitive agreement whereby Alamos will acquire all of the issued and outstanding shares of Argonaut pursuant to a court approved plan of arrangement.

As part of the Transaction, Alamos will acquire Argonaut’s Magino mine, located adjacent to its Island Gold mine in Ontario, Canada. The integration of the two operations is expected to create one of the largest and lowest-cost gold mines in Canada. Through the use of shared infrastructure, Alamos expects to unlock significant value with immediate and long-term synergies expected to total approximately US$515 million1. The addition of Magino is expected to increase Alamos’ combined gold production to over 600,000 ounces per year, with longer-term production potential of over 900,000 ounces per year. The combination materially enhances Alamos’ position as a leading, Canadian-focused, intermediate producer, with growing production and declining costs.

The Agreement has been unanimously approved by the Boards of Directors of Alamos and Argonaut, and Argonaut’s board recommends that their shareholders vote in favor of the Transaction.

The Board of Directors of Argonaut has received an opinion from Cormark Securities Inc. that based upon and subject to the assumptions, limitations, and qualifications stated, the consideration to be received by Argonaut shareholders pursuant to the Transaction is fair, from a financial point of view, to Argonaut shareholders.

“This is a logical and attractive transaction for both companies. 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 Reserve and Resource bases, long mine lives, and existing infrastructure that can support the bright future for the larger combined operation. Together, Island Gold and Magino will create one of the largest and most profitable mines in Canada, further enhancing our leading position as a Canadian focused intermediate gold producer,” stated John A. McCluskey, President and CEO of Alamos Gold.

“After considering a broad range of alternatives, we believe this Transaction provides a unique opportunity to place Magino in the hands of a well-capitalized and well-run company, who will be able to realize significant synergies given the proximity of the adjacent Island Gold Mine. We believe with adequate capital and an optimal expansion at Magino, the mine will deliver significant value to all stakeholders. We are grateful to our team at Magino for their significant contribution and hard work during mine and mill ramp-up. Similarly, we thank our exceptional teams in Mexico and Nevada for their continued hard work throughout the years,” stated Richard Young, President and CEO of Argonaut Gold.

Concurrently with the Transaction, Argonaut’s assets in the United States and Mexico will be spun out to its existing shareholders as a newly created junior gold producer. SpinCo will own 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, located in Mexico.

Under the terms of the Agreement, each Argonaut common share outstanding will be exchanged for 0.0185 Alamos common shares and 1 share of SpinCo2. The Exchange Ratio implies estimated total consideration of C$0.40 per Argonaut common share, or US$325 million.

This represents a 34% premium based on Argonaut’s and Alamos’ closing prices on March 26, 2024 on the Toronto Stock Exchange (“TSX”), and a 41% premium based on both companies’ 20-day volume-weighted average prices. Total consideration includes C$0.34 of Alamos common shares, based on the closing price of Alamos common shares on the TSX on March 26, 2024, and SpinCo common shares with an estimated value of C$0.063.

Alamos expects to issue approximately 20.3 million common shares as part of the Transaction, representing an equity value of approximately US$276 million on a fully diluted in-the-money basis, and an enterprise value of US$516 million.

Upon completion of the Transaction, existing Alamos and Argonaut shareholders will own approximately 95% and 5% of the pro forma company, respectively.

Tune in to our webcast at 8:30am ET as the Alamos Gold and Argonaut Gold Senior Leadership teams discuss details of our acquisition announcement: https://alamosgold.info/4cqroR8

In this short video, Alamos Gold’s President and CEO John McCluskey highlights how this transaction will unlock tremendous value by combining the adjacent Island Gold and Magino mines. Watch it here: https://vimeo.com/927748523?share=copy