In a friendly transaction, Alamos Gold will acquire Richmont Mines in an all-share transaction. Under the terms of the agreement, Richmont shareholders will receive 1.385 Alamos shares. The exchange ratio implies consideration of C$14.20 per Richmont common share, based on the closing price of Alamos common shares on the Toronto Stock Exchange (TSX) on September 8. This represents a 22% premium to Richmont’s closing price and implies a total equity value of approximately $770 million.
Upon completion of the transaction, existing Alamos and Richmont shareholders will own approximately 77% and 23% of the pro forma company, respectively.
Alamos Gold will now own Island Gold, a long-life, high-grade underground mine with growing production and first quartile cash costs, located in Ontario, Canada. The transaction solidifies Alamos’ position as a leading intermediate gold producer. The combined entity is expected to have diversified gold production of more than 500,000 ounces (oz) in 2017, anchored by three core, low-cost, long-life operations in Canada and Mexico.
“Our combination with Richmont reflects our core strategy of creating long-term value through operating high-quality assets,” said John McCluskey, president and CEO of Alamos. “The Island gold mine is a high-quality asset in every respect. We see excellent potential for reserve and production growth from one of the highest grade, lowest cost gold mines in Canada. With this production base, growth, and balance sheet strength, Alamos will be the leading intermediate producer and presents a compelling revaluation opportunity for both Alamos and Richmont shareholders.”
Richmont is selling the Beaufor mine, the Camflo mill and the Wasamac development project located in Quebec to Monarques Gold. In consideration, Monarques will issue a number of shares equating to 19.9% of its undiluted issued and outstanding common shares. In addition, the company will assume responsibility for the future amount payable to the Ministry of Energy and Natural Resources for the Quebec assets, including the Monique mine rehabilitation plans, estimated at approximately $5 million, should the facilities be closed.
Lastly, the following net smelter return royalties will be payable by Monarques to Richmont: 1.5% for the Wasamac property, of which 0.5% can be bought back for $7.5 million; 1% on Richmont’s claims in the Camflo property; and 1% on the Beaufor property once Monarques has produced 100,000 oz of gold, subsequent to the close of the transaction.
“This transformative transaction is a major milestone for Monarques, positioning the company to achieve the coveted status of gold producer,” said Jean-Marc Lacoste, president and CEO of Monarques. “We are very pleased to have Richmont as a significant shareholder, and we look forward to benefitting from their long history and experience as a successful underground gold miner.
“We are also extremely pleased to welcome Monarques’ 150 future employees, with whom we look forward to having a successful and rewarding relationship with. Monarques will have a much larger profile following the transaction, with a strong portfolio of mining assets in the Abitibi that includes the Beaufor mine, the Camflo and Beacon mills, the Wasamac and Croinor Gold advanced projects, and eight other high-quality exploration projects.”