TORONTO, April 13, 2015 /PRNewswire/ --
Creating Leading Intermediate Gold
Producer
Alamos Gold Inc. ("Alamos")
(TSX/NYSE:AGI) and AuRico Gold Inc. ("AuRico") (TSX/NYSE: AUQ)
are pleased to announce that they have entered into a definitive
agreement to combine their respective companies (the "Merger") by
way of a plan of arrangement, creating a new, leading intermediate
gold producer ("MergeCo"). The Merger combines two top-quality,
highly-complementary asset portfolios, including two long-life,
cash flow-generating gold mines: AuRico's Young-Davidson mine in Ontario, Canada and Alamos' Mulatos mine in Sonora, Mexico. The transaction is structured
as a merger of equals with a transaction equity value of
approximately US$1.5 billion.
Under the terms of the Merger, holders of Alamos shares will receive, for each share
held, 1 MergeCo share and US$0.0001
in cash, and holders of AuRico shares will receive, for each share
held, 0.5046 MergeCo shares. Upon completion of the Merger, former
Alamos and AuRico shareholders
will each own approximately 50% of MergeCo (named Alamos Gold
Inc.). In addition, a new company ("SpinCo"), to be named AuRico
Metals Inc., will be created to hold AuRico's Kemess project, a
1.5% net smelter return royalty ("NSR") on the Young-Davidson mine, AuRico's Fosterville and Stawell royalties, and will be
capitalized with US$20 million of
cash. Upon completion of the Merger, MergeCo will own a 4.9% equity
interest in SpinCo. The remaining shares of SpinCo will be
distributed 50% each to former Alamos and AuRico shareholders.
The merger is subject to shareholder and other applicable
regulatory approvals and satisfaction of other customary
conditions. The merger is expected to close in the second quarter
of 2015.
A joint conference call and webcast is scheduled for
Monday, April 13, 2015 beginning at
8:30 a.m. Eastern Time (details
provided below).
Highlights of the Merger
- Creation of a leading intermediate gold producer:
Creates a larger, diversified portfolio of assets located in stable
jurisdictions, underpinned by two top-tier producing mines,
Young-Davidson and Mulatos, and a significant pipeline of
high-quality development projects.
- Peer-leading growth profile in safe jurisdictions:
Expected to produce 375 - 425 koz of gold in 2015 in Mexico and Canada with the potential to grow organically
to over 700 koz of gold annually. The development portfolio is
anchored by quality, low-cost projects in Turkey as well as three projects in
North America (Esperanza, Lynn
Lake and Quartz Mountain).
- Strong financial position: Strong pro-forma cash
position of US$427 million, net cash
of US$94 million and growing cash
flow generation to support further growth.
- Enhanced capital markets profile: The combined market
capitalization of US$1.5 billion,
increased trading liquidity and expanded analyst coverage is
expected to significantly enhance the combined company's capital
markets profile.
- Revaluation opportunity: With diversified production,
superior growth profile, strong balance sheet, greater market
profile and proven management and operating teams, the combined
company is well positioned for a potential value re-rating.
- Potential to unlock significant value through SpinCo:
Shareholders of both Alamos and
AuRico will also benefit from the exposure to the significant value
potential of the Kemess project and stable, diversified royalty
revenue via ownership in SpinCo.
John McCluskey, President and CEO
of Alamos, stated: "We are very
pleased to bring this transaction forward to the benefit of both
sets of shareholders. Alamos has
remained disciplined in its growth initiatives, building and
preserving a robust balance sheet for the right opportunity. We
believe the addition of the flagship, long-life Young-Davidson mine is just that opportunity. The
combination of diversified production from three mines and a
pipeline of low-cost growth projects in safe jurisdictions equate
to a leading gold intermediate and a significant re-rate
opportunity for our collective shareholders."
Scott Perry, President and CEO of
AuRico stated: "This merger with Alamos represents a logical business
combination that will create a premier intermediate gold producer
with a diversified asset base that includes three low-cost
producing mines, a significant organic growth profile, a pipeline
of high-quality development projects, all of which is underpinned
by a solid balance sheet and led by an experienced and proven
management team. We are confident that our shareholders will
benefit from the value creation opportunities that will be realized
through an expanded and more diversified asset base and enhanced
cash flow generating capabilities. Shareholders will also benefit
from the creation of SpinCo as they retain ongoing exposure to
significant unlocked value in the highly prospective Kemess
project, and stable, diversified sources of royalty revenue."
Benefits to All Shareholders
- Diversified production from three North American mines
including the long-life, flagship Young-Davidson and Mulatos mines.
- Extensive growth portfolio of quality assets in safe
jurisdictions.
- Among the strongest balance sheets within its peer group with
positive net cash, as well as significant and growing cash flow
generation with which to fund growth.
- Significant potential synergies in Mexico and Canada.
- Re-rating potential as a leading intermediate gold producer
with a strong growth profile, increased trading liquidity and
enhanced capital market attractiveness.
- Combination of two complementary and highly experienced
management and operating teams.
- Exposure to SpinCo with significant unlocked value in the
Kemess project, diversified royalty revenues and led by a strong
management team.
Merger Summary
The proposed transaction will be completed pursuant to a plan of
arrangement and will require the approval of 66⅔% of Alamos shareholders and 66⅔% of AuRico
shareholders. The directors and officers of Alamos and AuRico have entered into support
agreements pursuant to which they agreed to vote their shares in
favor of the proposed transaction.
Alamos and AuRico's Board of
Directors have determined that the proposed transaction is in the
best interest of the respective shareholders, having taken into
account advice from their financial advisors, and have unanimously
approved the Merger. Alamos and
AuRico's Board of Directors recommend that their shareholders vote
in favor of the proposed transaction.
In addition to shareholder approvals, the proposed transaction
will be subject to applicable regulatory approvals and the
satisfaction of other customary conditions. The Merger includes
customary provisions, including fiduciary-out provisions, covenants
not to solicit other acquisition proposals and the right to match
any superior proposals. Termination fees of US$28.4 million will be paid to Alamos and US$37.5
million will paid to AuRico in certain circumstances should
the Merger not be completed.
Private Placement Transaction
In connection with the Merger, Alamos and AuRico have also agreed that
Alamos will subscribe for
approximately 27.9 million common shares of AuRico on a private
placement basis, representing approximately 9.9% of AuRico's
outstanding common shares after giving effect to the private
placement. The common shares will be acquired at a price of
US$2.99 per share, equal to AuRico's
closing price on the New York Stock Exchange on April 10, 2015, for total gross proceeds to
AuRico of approximately US$83.3
million. Completion of the private placement is subject to
the satisfaction of certain regulatory requirements but is not
contingent on completion of the Merger.
Management Team and Board of Directors
The senior executive team and the Board of Directors of the
combined company will draw from the extensive experience and
expertise of both companies. The senior executive team and Chairman
of the combined company will include:
- Alan Edwards: Chairman
(AuRico)
- John McCluskey: CEO
(Alamos)
- Peter MacPhail: COO
(AuRico)
- Jamie Porter: CFO (Alamos)
The Board of Directors will be comprised of 10 directors with
each company having equal representation of 5 directors, including
Scott Perry and John McCluskey. The remaining directors will be
nominated upon completion of the transaction.
SpinCo
Pursuant to the plan of arrangement, the following assets will
be transferred to SpinCo:
- The Kemess project;
- A newly created 1.5% NSR on the Young-Davidson mine;
- The existing 2.0% NSR on the Fosterville mine;
- The existing 1.0% NSR on the Stawell mine; and
- US$20 million in cash
The senior executive team and Board of Directors of SpinCo will
include:
- Scott Perry: Executive Chairman
(AuRico)
- Chris Richter: CEO (AuRico)
- Robert Chausse: CFO
(AuRico)
- Two director nominees of Alamos
Upon completion of the plan of arrangement, MergeCo will own a
4.9% equity interest in SpinCo. The remaining shares of SpinCo will
be distributed 50% each to former Alamos and AuRico shareholders.
SpinCo will allow all shareholders to benefit from the
advancement of the Kemess project and stable, diversified revenue
generation from three royalty assets.
Advisors and Counsel
Alamos' financial advisor is
Maxit Capital LP and its legal counsel in Canada and the US is Torys LLP. Maxit Capital
LP provided an opinion to Alamos'
Board of Directors that, as of the date thereof and subject to the
assumptions, limitations and qualifications set out therein, the
transaction is fair, from a financial point of view, to the
shareholders of Alamos.
AuRico's financial advisor is Scotiabank, its Canadian legal
counsel is Fasken Martineau and its US legal counsel is
Paul Weiss. Scotiabank provided an
opinion to AuRico's Board of Directors that, as of the date thereof
and subject to the assumptions, limitations and qualifications set
out therein, the transaction is fair, from a financial point of
view, to the shareholders of AuRico.
Conference Call and Webcast
Alamos and AuRico will host a
joint conference call and webcast on Monday,
April 13, 2015 at 8:30 a.m. Eastern
time for members of the investment community to discuss the
business combination. Participants may join the conference call
using the following call-in details:
- Local and international: (416) 340-8527
- North American toll-free: (800) 355-4959
A live webcast of the conference call can be accessed via the
following link: http://www.gowebcasting.com/6474 or via
http://www.alamosgold.com or http://www.auricogold.com.
A replay of this conference call will be available until
May 22, 2015. The replay numbers
are:
- Local and international: (905) 694-9451
- North American toll-free: (800) 408-3053
- Replay passcode: 5616027
An archived version of the webcast will be available via the
following link: http://www.gowebcasting.com/6474 and via
http://www.alamosgold.com and http://www.auricogold.com.
About Alamos Gold
Alamos is an established
Canadian-based gold producer that owns and operates the Mulatos
Mine in Mexico, and has
exploration and development activities in Mexico, Turkey and the
United States. The Company employs more than 500 people and
is committed to the highest standards of sustainable development.
As of March 30, 2015, Alamos had 127,357,486 common shares
outstanding (140,164,052 shares fully diluted), which are traded on
the TSX and NYSE under the symbol "AGI".
About AuRico
Gold
AuRico Gold is a leading Canadian
gold producer with mines and projects in North America that have significant production
growth and exploration potential. The Company is focused on its
core operations including the cornerstone Young-Davidson gold mine in northern Ontario, and the El Chanate mine in Sonora
State, Mexico. AuRico's project
pipeline also includes the advanced development Kemess Property in
northern British Columbia and the
Lynn Lake Gold Camp in northern Manitoba. The Company also has other
exploration opportunities in Canada and Mexico. AuRico's head office is located in
Toronto, Ontario, Canada.
For further information please visit the Alamos and AuRico websites at
http://www.alamosgold.com and http://www.auricogold.com or
contact:
The TSX and NYSE have not reviewed and do not accept
responsibility for the adequacy or accuracy of this release. No
stock exchange, securities commission or other regulatory authority
has approved or disapproved the information contained
herein.
Alamos Cautionary Statement
No stock exchange, securities commission or other regulatory
authority has approved or disapproved the information contained
herein. This News Release includes certain "forward-looking
statements". All statements other than statements of historical
fact included in this release, including without limitation
statements regarding forecast gold production, gold grades,
recoveries, waste-to-ore ratios, total cash costs, potential
mineralization and reserves, exploration results, and future plans
and objectives of Alamos, are
forward-looking statements that involve various risks and
uncertainties. These forward-looking statements include, but are
not limited to, statements with respect to mining and processing of
mined ore, achieving projected recovery rates, anticipated
production rates and mine life, operating efficiencies, costs and
expenditures, changes in mineral resources and conversion of
mineral resources to proven and probable reserves, and other
information that is based on forecasts of future operational or
financial results, estimates of amounts not yet determinable and
assumptions of management.
Exploration results that include geophysics, sampling, and drill
results on wide spacings may not be indicative of the occurrence of
a mineral deposit. Such results do not provide assurance that
further work will establish sufficient grade, continuity,
metallurgical characteristics and economic potential to be classed
as a category of mineral resource. A mineral resource that is
classified as "inferred" or "indicated" has a great amount of
uncertainty as to its existence and economic and legal feasibility.
It cannot be assumed that any or part of an "indicated mineral
resource" or "inferred mineral resource" will ever be upgraded to a
higher category of resource. Investors are cautioned not to assume
that all or any part of mineral deposits in these categories will
ever be converted into proven and probable reserves.
Any statements that express or involve discussions with respect
to predictions, expectations, beliefs, plans, projections,
objectives, assumptions or future events or performance (often, but
not always, using words or phrases such as "expects" or "does not
expect", "is expected", "anticipates" or "does not anticipate",
"plans", "estimates" or "intends", or stating that certain actions,
events or results "may", "could", "would", "might" or "will" be
taken, occur or be achieved) are not statements of historical fact
and may be "forward-looking statements." Forward-looking statements
are subject to a variety of risks and uncertainties that could
cause actual events or results to differ from those reflected in
the forward-looking statements.
There can be no assurance that forward-looking statements will
prove to be accurate and actual results and future events could
differ materially from those anticipated in such statements.
Important factors that could cause actual results to differ
materially from Alamos'
expectations include, among others, risks related to international
operations, the actual results of current exploration activities,
conclusions of economic evaluations and changes in project
parameters as plans continue to be refined as well as future prices
of gold and silver, as well as those factors discussed in the
section entitled "Risk Factors" in Alamos' Annual Information Form. Although
Alamos has attempted to identify
important factors that could cause actual results to differ
materially, there may be other factors that cause results not to be
as anticipated, estimated or intended. There can be no assurance
that such statements will prove to be accurate as actual results
and future events could differ materially from those anticipated in
such statements. Accordingly, readers should not place undue
reliance on forward-looking statements.
AuRico Cautionary Statement
This press release contains forward-looking statements and
forward-looking information as defined under Canadian and U.S.
securities laws.
All statements, other than statements of historical fact, are
forward-looking statements. The words "expect", "believe",
"anticipate", "will", "intend", "estimate", "forecast", "budget"
and similar expressions identify forward-looking statements.
Forward-looking statements include information as to the timing,
success and expected benefits of the Merger and the future
prospectus of MergeCo and Spinco, strategy, plans or future
financial or operating performance, such as AuRico's expansion
plans, project timelines, production plans, projected cash flows or
capital expenditures, cost estimates, projected exploration
results, reserve and resource estimates and other statements that
express management's expectations or estimates of future
performance. Forward-looking statements are necessarily based upon
a number of factors and assumptions that, while considered
reasonable by management, are inherently subject to significant
uncertainties and contingencies. Known and unknown factors could
cause actual results to differ materially from those projected in
the forward-looking statements, including: uncertainty of
production and cost estimates; fluctuations in the price of gold
and foreign exchange rates; the risk that mining operations do not
meet expectations; the risk that projects will not be developed
according to budgets or timelines, changes in laws in Canada, Mexico and other jurisdictions in which AuRico
may carry on business; risks of obtaining necessary licenses,
permits or approvals for operations or projects; disputes over
title to properties; the speculative nature of mineral exploration
and development; risks related to aboriginal or Ejido title claims; compliance risks with
respect to current and future environmental regulations;
disruptions affecting operations; opportunities that may be pursued
by AuRico; employee relations; availability and costs of mining
inputs and labor; the ability to secure capital to execute business
plans; volatility of AuRico's share price; the effect of future
financings; litigation; risk of loss due to sabotage and civil
disturbances; the values of assets and liabilities based on
projected future cash flows; risks arising from derivative
instruments or the absence of hedging; adequacy of internal control
over financial reporting; changes in credit rating; and the impact
of inflation. Actual results and developments are likely to differ,
and may differ materially, from those expressed or implied by the
forward-looking statements contained herein. Such statements are
based on a number of assumptions which may prove to be incorrect,
including assumptions about: shareholder and regulatory approvals,
anticipated synergies and efficiencies, business and economic
conditions; commodity prices and the price of key inputs such as
labour, fuel and electricity; credit market conditions and
conditions in financial markets generally; revenue and cash flow
estimates, production levels, development schedules and the
associated costs; ability to procure equipment and supplies and
ability to do so on a timely basis; the timing of the receipt of
permits and other approvals for projects and operations; the
ability to attract and retain skilled employees and contractors for
the operations; the accuracy of reserve and resource estimates; the
impact of changes in currency exchange rates on costs and results;
interest rates; taxation; and ongoing relations with employees and
business partners.
In particular, forward-looking information included in this
document includes, but is not limited to: (1) assumptions and
expectations with regard to the Merger and its completion and the
anticipated benefits and advantages of the Merger, (2) the future
prospectus of MergeCo and Spinco and the ability to unlock value,
(3) production estimates and production growth rates, which assume
accuracy of projected ore grade, mining rates, recovery timing and
recovery rate estimates and may be impacted by unscheduled
maintenance, labour and contractor availability; (4) capital
expenditures and other cash costs, which assume foreign exchange
rates and accuracy of production estimates, and may be impacted by
unexpected maintenance, the need to hire external resources and
accelerated capital plans; (5) profits and free cash flow, which
assume production and expenditure estimates and may be impacted by
gold prices, production estimates, and the timing of payments, and
(6) reserves and resources which are forward looking statements by
their nature involving implied assessment, and may be impacted by
metal prices, future drilling results, operating costs, mining
recoveries and dilution rates. AuRico disclaims any intention or
obligation to update or revise any forward-looking statements
whether as a result of new information, future events or otherwise,
except as required by applicable law.
Scott Parsons, Director, Investor
Relations, Alamos Gold Inc., +1-416-368-9932 x439,
sparsons@alamosgold.com ; Anne Day,
Vice President, Investor Relations & Communications, AuRico
Gold Inc., +1-647-260-8880, anne.day@auricogold.com