Alamos Gold and AuRico Gold plan to merge, creating a new, leading intermediate gold producer (MergeCo). The deal, valued at $1.5 billion, combines two complementary asset portfolios, including two gold mines: AuRico’s Young-Davidson mine in Ontario, Canada, and Alamos' Mulatos mine in Sonora, Mexico.

In addition, a new company, to be named SpinCo, 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 $20 million of cash.

Upon completion, MergeCo will own a 4.9% equity interest in SpinCo.

MergeCo is expected to produce 375,000 to 425,000 oz of gold in 2015 and will have the potential to grow organically to more than 700,000 oz/yr of gold. 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).

“Alamos has remained disciplined in its growth initiatives, building and preserving a robust balance sheet for the right opportunity,” said John McCluskey, president and CEO of Alamos. “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.”

The senior executive team and chairman of the combined company will include Alan Edwards, chairman (AuRico); John McCluskey, CEO (Alamos); Peter MacPhail, COO (AuRico); and Jamie Porter, CFO (Alamos). Scott Perry will be the executive chairman (AuRico) of SpinCo.

Resource Center Whitepapers, Videos, Case Studies

Let's stay in touch!

All of the latest mining news and our digital edition sent to your inbox once a week.

We'll never share your email address, and you can opt out at any time, we promise.