ALAMOS GOLD INC

Alamos agreed to buy all of Argonaut Gold, which owns the Magino mine next to Island Gold in Ontario, through a court-approved plan of arrangement. Each Argonaut share gets 0.0185 Alamos shares plus one share of a new spin-off company holding Argonaut's US and Mexican assets (Florida Canyon, El Castillo, La Colorada, Cerro del Gallo). Alamos expects to issue about 20.3 million shares, with Alamos holders owning about 95% afterwards, so existing holders are diluted by about 5%. Alamos expects about US$515 million of combined synergies from integrating Magino and Island Gold (the company's own estimate). The deal needs 66 2/3% approval from Argonaut holders at a meeting expected in June 2024, plus court and regulatory approvals, and carries a C$20 million break fee payable to Alamos in certain cases. Alamos also agreed to a C$50 million private placement into Argonaut and to invest US$10 million for 19.9% of the spin-off once it lists.

business combination

Alamos filed the formal acquisition report for Richmont, confirming the deal closed on November 23, 2017, resolving the pending thread. Each Richmont share was exchanged for 1.385 Alamos shares, leaving 389,059,503 Class A shares outstanding, with Alamos holders owning about 77% and former Richmont holders about 23%. Richmont's shares were delisted from the TSX and NYSE. The pro forma figures at September 30, 2017 show cash of $197.2 million and total assets of $3,288.6 million. Debt and financing obligations are $4.4 million current and $5.1 million non-current. Richmont's Quebec assets (Beaufor, Camflo Mill, Wasamac) sale closed October 2, 2017.

business combination

Shareholders of both companies approved the Richmont acquisition on November 16, 2017: 98.46% of votes cast by Alamos holders and 92.56% by Richmont holders. Closing is expected November 23, 2017, still subject to regulatory approvals and customary conditions. Alamos had about 300.65 million shares outstanding before the issuance, and 78.28% of them were voted.

business combination

Alamos agreed to buy Richmont Mines, owner of the Island Gold mine in Ontario, by exchanging 1.385 Alamos shares for each Richmont share (about C$14.20 per share, a 22% premium; equity value about US$770 million). Existing Alamos holders would own about 77% of the combined company and Richmont holders 23%, so current shareholders are diluted by issuing new shares. The deal needs votes of both companies' shareholders (expected November 2017), court and regulatory approvals, and carries a C$35 million reciprocal break fee. Richmont is separately selling its Quebec assets, which is not a condition of the deal. This is a new acquisition thread following the Young-Davidson and Mulatos/El Chanate assets already held; the release says the combined company would have no debt.

business combination

Alamos agreed to buy Carlisle Goldfields, owner of the Lynn Lake gold project in Manitoba, to consolidate 100% ownership. Carlisle holders get 0.0942 of an Alamos share plus 0.0942 of a three-year warrant (C$10.00 exercise price) per share, worth about C$0.60 per share, a 62% premium. Net of Carlisle's cash and Alamos's existing 19.9% stake, consideration is about US$22.1 million (C$28.5 million), with roughly 5.4 million new Alamos shares (about 2% of shares outstanding). Lynn Lake is the project AuRico entered in November 2014 with a 25% interest and an earn-in option to 60%, which Alamos inherited through the merger. The deal needs Carlisle shareholder votes (a special meeting around December 16, 2015), court and regulatory approvals. The filing also lists a semi-annual dividend press release as an exhibit, but its text is not shown.

business combination

The Alamos-AuRico merger closed on July 2, 2015, resolving the pending deal. Each former Alamos share became 1 Class A share of the combined Alamos, US$0.0001 in cash and 0.4397 shares of the spun-off AuRico Metals; each former AuRico share became 0.5046 Class A shares and 0.2219 AuRico Metals shares. About 255.5 million Class A shares are outstanding, split roughly 50/50 between the two groups; Alamos keeps about 4.9% of AuRico Metals (about 118.1 million shares), which holds Kemess, royalties and cash. The old DRIP was terminated and the rights plan restated for clerical reasons. A new audit committee and KPMG as auditors were named, and trading under AGI and AMI was expected from July 6, 2015.

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The Ontario Superior Court of Justice gave final approval to the Alamos-AuRico merger, following the June 24 shareholder meetings. Closing is expected July 2, 2015, still subject to regulatory approvals and customary conditions.

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Alamos cut its semi-annual dividend to US$0.03 per share from US$0.10, payable May 29, 2015 to holders of record on May 15, 2015. The company attributes the cut to the sharp decline in the gold price and its shift to a growth phase, with spending expected to ramp up on its development projects. It also introduced a dividend reinvestment plan letting shareholders take shares at up to a 5% discount instead of cash.

dividend declaration

Alamos agreed to merge with AuRico Gold in a merger of equals valued at about US$1.5 billion: Alamos holders get 1 share of the combined company (also called Alamos Gold) per share held plus US$0.0001 cash, AuRico holders get 0.5046 shares, and each side ends up with about 50%. AuRico's Kemess project, royalties and US$20 million cash go into a new spin-off company, AuRico Metals, with 50% of its shares going to each group of former shareholders (the combined company keeps 4.9%). The deal brings AuRico's Young-Davidson mine in Ontario alongside Mulatos, needs 66 2/3% votes from both sets of shareholders and regulatory approvals, is expected to close in Q2 2015, and carries break fees of US$28.4 million payable to Alamos and US$37.5 million to AuRico in certain cases. Alamos also agreed to buy about 27.9 million AuRico shares (about 9.9%) at US$2.99 for about US$83.3 million, which is not contingent on the merger completing.

material agreement

Alamos hit its 2013 targets, producing 190,000 ounces of gold at Mulatos and selling a record 198,200 ounces at a total cash cost of about $500 per ounce. For 2014 it guides to lower output of 150,000-170,000 ounces at higher costs (all-in sustaining $960-$1,000 per ounce), citing lower ore grades as the high-grade Escondida zone runs out, the move to underground mining, and a switch to contract mining. The 2014 Mexico capital budget is $54.8 million, including $11.3 million for Esperanza development work. Cash was about $410 million with no debt.

production update

Ahead of the August 27, 2013 Esperanza shareholder vote on the Alamos deal, proxy voting was extended until the meeting starts. The Alamos warrants to be issued will now expire five years after the arrangement takes effect, instead of May 24, 2017. Sprott funds agreed to vote about 12% of Esperanza shares in favour, bringing locked-up support to about 18%. Alamos's CEO said the company is still assessing risks at the Esperanza project, which is new cautionary language compared with the July announcement.

business combination

Alamos agreed to buy Esperanza Resources, owner of the Esperanza gold project in Morelos, Mexico, for C$0.85 cash per share, about C$69.4 million for the equity. Esperanza shareholders also get about five million Alamos warrants, and Esperanza warrant holders about two million, with the deal subject to a court-approved arrangement and a 66 2/3% Esperanza shareholder vote. Alamos says it would fund development from existing cash (about $490 million, no debt) and the filing states the deal would involve virtually no dilution to Alamos shareholders. Esperanza also terminated its earlier agreements with Pan American Silver, and a C$2.7 million break fee to Alamos applies in certain circumstances.

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