Alamos Gold Inc. (TSX:AGI) (NYSE:AGI) and Richmont Mines Inc. (TSX:RIC) (NYSE:RIC) are pleased to announce that they have entered into a definitive agreement whereby Alamos will acquire all of the issued and outstanding shares of Richmont pursuant to a plan of arrangement further enhancing Alamos’ position as a leading intermediate gold producer.
Under the terms of the Agreement, all of the Richmont issued and outstanding common shares will be exchanged on the basis of 1.385 Alamos common shares for each Richmont common share. 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 on September 8, 2017. This represents a 22% premium to Richmont’s closing price and a 32% premium based on both companies’ 20-day volume-weighted average prices, both as at September 8, 2017 on the TSX. This implies a total equity value of approximately US$770 million on a fully diluted in-the-money basis and an enterprise value of US$683 million.
Upon completion of the Transaction, existing Alamos and Richmont shareholders will own approximately 77% and 23% of the pro forma company, respectively.
Concurrent with the announcement of the Transaction, Richmont announced the sale of the Beaufor Mine, the Camflo Mill and the Wasamac development project located in Quebec (collectively the “Quebec Assets”). Further details regarding the sale of the Quebec Assets can be found in the Richmont press release dated September 11, 2017. The sale of the Quebec Assets is the culmination of a strategic review process that Richmont publicly disclosed in Q1 2017. The sale is expected to close on, or about, September 29, 2017 and is not a condition to the Transaction.
John McCluskey, President and CEO of Alamos, stated: “Our combination with Richmont reflects our core strategy of creating long term value through operating high quality assets. 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.”
Renaud Adams, President and CEO of Richmont, stated: “Over the past three years, Richmont has delivered on its commitment to create value for our shareholders through our disciplined approach to growing production and reducing costs at the Island Gold Mine. This transaction builds on that commitment as our shareholders will benefit from having meaningful ownership in a diversified intermediate producer with a portfolio of high-quality assets and a proven and experienced management team that shares our commitment to creating long-term sustainable value. Our shareholders will maintain exposure to the potential of the Island Gold Mine, which is now firmly established as one of the lowest cost operations in the Americas.”
Benefits to Alamos Shareholders
Benefits to Richmont Shareholders
The proposed Transaction will be completed pursuant to a plan of arrangement completed under the Business Corporations Act (Quebec). The Transaction will require approval by 66 2/3 percent of the votes cast by the shareholders of Richmont at a special meeting of Richmont shareholders expected to be held in November 2017. The issuance of shares by Alamos pursuant to the Transaction is also subject to approval by the majority of the votes cast by the shareholders of Alamos at a special meeting of Alamos shareholders expected to be held in November 2017 with the transaction expected to close mid-November 2017. The directors and senior officers of Richmont and Alamos have entered into voting support agreements, pursuant to which they will vote their common shares held in favour of the 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. The Arrangement Agreement includes customary deal protections, including reciprocal fiduciary-out provisions, non-solicitation covenants, and the right to match any superior proposals. Additionally, a reciprocal break fee payable in an amount of C$35 million and a reciprocal expense reimbursement fee is payable by one party to the other party in certain circumstances, if the Transaction is not completed.
Full details of the Transaction will be included in the meeting materials which are expected to be mailed to the respective shareholders of Alamos and Richmont in October 2017.
Boards of Directors’ Recommendations
The Agreement has been unanimously approved by the Boards of Directors of Alamos and Richmont, and each board recommends that their respective shareholders vote in favor of the Transaction.
The Board of Directors of Alamos has received an opinion from BMO Capital Markets that based upon and subject to the assumptions, limitations, and qualifications stated in such opinion, the consideration to be paid by Alamos pursuant to the Transaction is fair, from a financial point of view, to Alamos. The Board of Directors of Richmont has received separate opinions from Macquarie Capital Markets Canada Ltd. and Maxit Capital LP that based upon and subject to the assumptions, limitations, and qualifications stated in each such opinions, the consideration to be received by Richmont shareholders pursuant to the Transaction is fair, from a financial point of view, to Richmont shareholders.
Advisors and Counsel
BMO Capital Markets is acting as financial advisor to Alamos and its Board of Directors. Torys LLP is acting as Alamos’ legal advisor.
Macquarie Capital Markets Canada Ltd. and Maxit Capital LP are acting as financial advisors to Richmont and its Board of Directors. Fasken Martineau DuMoulin LLP is acting as Richmont’s legal advisor.
About Alamos Gold Inc.
Alamos is a Canadian-based intermediate gold producer with diversified production from three operating mines in North America. This includes the Young-Davidson mine in northern Ontario, Canada and the Mulatos and El Chanate mines in Sonora State, Mexico. Additionally, the Company has a significant portfolio of development stage projects in Canada, Mexico, Turkey, and the United States. Alamos employs more than 1,300 people and is committed to the highest standards of sustainable development. The Company’s shares are traded on the TSX and NYSE under the symbol “AGI”.
About Richmont Mines Inc.
Richmont Mines currently produces gold from the Island Gold Mine in Ontario, and the Beaufor Mine in Quebec. The Corporation is also advancing development of the significant high-grade resource extension at depth of the Island Gold Mine in Ontario. With more than 35 years of experience in gold production, exploration and development, and prudent financial management, the Corporation is well-positioned to cost-effectively build its Canadian reserve base and to successfully enter its next phase of growth. The Company’s shares are traded on the TSX and NYSE under the symbol “RIC”.
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