Alamos Gold Inc. (TSX:AGI) (NYSE:AGI) announced that it has entered into a binding agreement to sell its non-core Esperanza Gold Project located in Morelos State, Mexico to Zacatecas Silver Corp. for total consideration of up to $60 million. The Transaction is comprised of the following:
(i) $21 million of total consideration upon closing of the Transaction, including:
(ii) $39 million of additional consideration upon the completion of the following milestones:
The sale of Esperanza is consistent with Alamos’ strategy of monetizing and maximizing the value of its non-core assets while focusing on advancing its strong portfolio of high-return growth projects. With the monetization of Esperanza, Alamos has surfaced nearly $100 million in total consideration over the past two years through the sale of non-core assets and gains on the sale of equity securities in other companies.
Upon closing of the transaction, it is expected Alamos will own approximately 15% of Zacatecas Silver common shares outstanding. Combined with the silver stream and Contingent Payments, this will provide Alamos with meaningful ongoing exposure to Esperanza.
With respect to the Contingent Payments, Zacatecas Silver may issue shares to satisfy 50% of such payments, subject to Alamos holding no more than 19.99% of Zacatecas Silver on a partially-diluted basis. The shares are to be issued based on the 10-day volume weighted average trading price prior to the date of issuance.
Additionally, Zacatecas Silver has committed to incur a minimum of $7.5 million over a three-year period following closing of the Transaction, directed to advancing the development of Esperanza and to obtain approval of the Environmental Impact Assessment Report. In the event the minimum spend is not incurred within the three-year period following the closing of the Transaction, the difference between what was spent and the minimum commitment shall be added to the Contingent Payments.
Alamos and Zacatecas Silver will also enter into an investor rights agreement on closing that will provide Alamos, among other things, with: i) the right to designate one nominee for election or appointment to Zacatecas Silver’s Board of Directors as long as Alamos holds at least 10% of Zacatecas Silver’s outstanding shares, and ii) the right to participate in future equity offerings to maintain its pro-rata investment in Zacatecas Silver as long as Alamos holds at least 5% of Zacatecas Silver’s outstanding shares.
The Zacatecas Silver common shares issued to Alamos on closing of the Transaction will be subject to a voluntary hold period of: i) six months for 33% of the Initial Shares, ii) twelve months for 33% of the Initial Shares, and iii) eighteen months for 34% of the Initial Shares.
The Transaction is expected to close in the second quarter of 2022 and is subject to customary closing conditions for a transaction of this nature.
Haywood Securities Inc. is acting as financial advisor to Alamos, with Torys LLP acting as legal advisor to Alamos.
Alamos is a Canadian-based intermediate gold producer with diversified production from three operating mines in North America. This includes the Young-Davidson and Island Gold mines in northern Ontario, Canada and the Mulatos mine 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 1,700 people and is committed to the highest standards of sustainable development.
Collective Mining Ltd. (TSX-V: CNL) (OTCQX: CNLMF) is pleased to ... READ MORE
Ultra Lithium Inc. (TSX-V:ULT) (OTCQB: ULTXF) (Frankfurt: QFB) is... READ MORE
Discovery Silver Corp. (TSX: DSV) (OTCQX: DSVSF) is pleased to an... READ MORE
SKRR Exploration Inc. (TSX-V: SKRR) (FSE: B04Q) is pleased to an... READ MORE
Robex Resources Inc. (TSX-V: RBX) (FRA: RB4) is pleased to announ... READ MORE
We acknowledge the [financial] support of the Government of Canada.