Argonaut’s Magino mill use a traditional carbon-in-pulp method to recover gold from ore mined at its open-pit operations. (Photo: Argonaut Gold)

Alamos Gold Inc. said it will acquire Argonaut Gold Inc. in an all-share transaction valued at $276 million. 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 said it expects to unlock significant value with immediate and long-term synergies expected to total approximately $515 million. The addition of Magino is expected to increase Alamos’ combined gold production to more than 600,000 oz/y, with longer term production potential of more than 900,000 oz/y.

“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,” said John McCluskey, president and CEO, Alamos Gold. “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.”

Argonaut’s assets in the U.S. and Mexico will be spun out to its existing shareholders as a newly created junior gold producer. This includes the Florida Canyon mine in Nevada, and the El Castillo Complex, the La Colorada operation, and the Cerro del Gallo project, located in Mexico.

The directors and members of senior management of Argonaut, as well as Argonaut’s two largest shareholders have entered into support agreements pursuant to which they agreed to vote their shares in favor of the proposed transaction. In addition to shareholder and court approvals, the transaction is subject to applicable regulatory approvals and the satisfaction of certain other closing conditions customary for a transaction of this nature.