TORONTO, September 11, 2017 /PRNewswire/ --
Alamos Gold Inc. ('Alamos') (TSX: AGI) (NYSE: AGI)
and Richmont Mines Inc. ('Richmont') (TSX: RIC) (NYSE: RIC)
are pleased to announce that they have entered into a definitive
agreement (the 'Agreement') whereby Alamos will acquire all of the issued and
outstanding shares of Richmont pursuant to a plan of arrangement
(the 'Transaction'), 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'). 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,
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.
Transaction Highlights
- Acquisition of a High-quality, Free Cash
Flowing Mine in a World-class Jurisdiction
- Island Gold is a long-life, high-grade underground
mine with growing production and first quartile cash costs, located
in Ontario, Canada.
- Solidifies Position as a Leading Intermediate Gold
Producer - Combined entity is expected to have diversified
gold production of over 500,000 ounces in 2017, anchored by three
core, low-cost, long-life operations in Canada and Mexico.
- Superior Production Growth and Cost Profile
- Island Gold's near term production growth complements
Alamos' existing peer-leading
growth profile, while lowering the near and long-term cost profile
of the combined company.
- Improved Cash Flow Generation to Support
Peer-leading Growth Pipeline - Island
Gold provides immediate cash flow accretion and stronger operating
cash flow to support internal growth initiatives of the pro forma
company.
- Stronger Financial Position and Flexibility
- Combined entity will have increased financial
flexibility with enhanced free cash flow, no debt, and a
strengthened balance sheet with cash and equity securities of
approximately US$229 million.
- Revaluation Opportunity Through Enhanced Capital Markets
Profile - Combined entity will become a top 10 gold
producer in North America, with
nearly 60% of its production in Canada, peer leading growth, a strong balance
sheet, proven management team, and increased trading liquidity
providing a strong revaluation opportunity through its enhanced
appeal in the market.
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
- Acquisition of a high-quality, high-grade, long-life asset in
Canada with excellent exploration
potential
- Strengthens and de-risks portfolio of assets with addition of a
third core, long-life producing asset
- Island Gold provides near-term production growth while lowering
combined cost profile
- Delivers immediate earnings and cash flow accretion while
providing stronger operating and free cash flow generation
- Further strengthens Alamos'
balance sheet and financial flexibility
- Aligns well with Alamos' core
competencies and delivers corporate, tax and other synergies with
two underground mines in Ontario
Benefits to Richmont Shareholders
- Immediate and significant premium of approximately 32% based on
the 20-day volume-weighted average prices of both companies
- Meaningful ownership in Alamos' high-quality portfolio of assets,
including diversified North American gold production and
peer-leading growth
- Continued exposure to Island Gold's significant operating and
exploration upside potential
- Combined company provides significant revaluation potential as
a diversified intermediate producer with established growth
potential approaching one million ounces per year
- Significantly improved trading liquidity and capital markets
exposure
- Provides ongoing return of capital for shareholders through
participation in Alamos'
semi-annual dividend
Transaction Summary
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.
Conference Call and Webcast
Alamos and Richmont will host a
joint conference call and webcast on Monday,
September 11, 2017 at 8:30 a.m.
Eastern time for members of the investment community to
discuss the Transaction. Participants may join the conference call
using the following call-in details:
- Local and international: (416)340-2216
- North American toll-free: (800)377-0758
A live webcast of the conference call will be available
at http://www.alamosgold.com or http://www.richmont-mines.com.
A replay of this conference call will be available until
October 12, 2017. The replay numbers
are:
- Local and international: (905)694-9451
- North American toll-free: (800)408-3053
- Replay passcode: 8339391
An archived version of the webcast will be available
at http://www.alamosgold.com or http://www.richmont-mines.com.
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".
Technical Information
Chris Bostwick, FAusIMM, Alamos
Gold's Vice President, Technical Services, has reviewed and
approved the scientific and technical information regarding
Alamos and its projects contained
in this news release. Chris Bostwick
is a Qualified Person within the meaning of Canadian Securities
Administrator's National Instrument 43-101 ("NI 43-101").
Daniel Adam, P. Geo., Ph.D.,
Vice-President, Exploration, and Leon
LeBlanc, P. Eng., Chief Engineer, Island Gold, both
employees of Richmont, have reviewed and approved the scientific
and technical information regarding Richmont and its projects
contained in this news release. Daniel
Adam and Leon LeBlanc are
Qualified Persons within the meaning of NI 43-101.
Cautionary Note - Forward Looking
Statements
This News Release contains "forward-looking statements". All
statements other than statements of historical fact included in
this release, are forward-looking statements that involve various
risks and uncertainties and are based on forecasts of future
operational or financial results, estimates of amounts not yet
determinable and assumptions of management. Any statements that
express or involve discussions with respect to predictions,
expectations, beliefs, plans, projections, objectives, assumptions
or future events or performance (often, but not always, using words
or phrases such as "expects" or "does not expect", "is expected",
"anticipates" or "does not anticipate", "plans", "estimates" or
"intends", or stating that certain actions, events or results
"may", "could", "would", "might", "have potential" or "will" be
taken, occur or be achieved) are not statements of historical fact
and may be "forward-looking statements." Forward-looking statements
are subject to a variety of risks and uncertainties that could
cause actual events or results to differ from those reflected in
the forward-looking statements. There can be no assurance that
forward-looking statements will prove to be accurate and actual
results and future events could differ materially from those
anticipated in such statements. In particular, forward-looking
information included in this document includes, but is not limited
to: (i) assumptions and expectations with regard to the Transaction
and its completion and the anticipated benefits and advantages of
the Transaction; (ii) the future prospects, including exploration
potential, resulting from the Transaction and the ability to unlock
value, (iii) production estimates and production growth rates,
which assume accuracy of projected ore grade, mining rates,
recovery timing and recovery rate estimates and may be impacted by
unscheduled maintenance, labour and contractor availability; (iv)
capital expenditures and other cash costs, which assume foreign
exchange rates and accuracy of production estimates, and may be
impacted by unexpected maintenance, the need to hire external
resources and accelerated capital plans; (v) profits and free cash
flow, which assume production and expenditure estimates and may be
impacted by gold prices, production estimates, and the timing of
payments, and (vi) reserves and resources which are forward-looking
statements by their nature involving implied assessment, and may be
impacted by metal prices, future drilling results, operating costs,
mining recoveries and dilution rates. Other factors include,
ongoing permitting requirements and the ability to work with local
populations, the actual results of current exploration activities,
conclusions of economic evaluations and changes in project
parameters as plans continue to be refined as well as future prices
of gold, and those factors discussed in the section titled "Risk
Factors" in Alamos' Annual
Information Form and other disclosures of "Risk Factors" by
Alamos, available on SEDAR and
EDGAR. Although Alamos has
attempted to identify important factors that could cause actual
results to differ materially, there may be other factors that cause
results not to be as anticipated, estimated or intended. There can
be no assurance that such statements will prove to be accurate as
actual results and future events could differ materially from those
anticipated in such statements. Accordingly, readers should not
place undue reliance on forward-looking statements.
The TSX and NYSE have not reviewed
and do not accept responsibility for the adequacy or accuracy of
this release. No stock exchange, securities commission or other
regulatory authority has approved or disapproved the information
contained herein.
For further information please visit the Alamos and Richmont websites
at http://www.alamosgold.com or http://www.richmont-mines.com.
Contact:
Scott Parsons
Vice-President, Investor Relations
Alamos Gold Inc.
+1-416-368-9932 x 5439
sparsons@alamosgold.com
Anne Day
Senior Vice President, Investor Relations
Richmont Mines Inc.
+1-416-368-0291 ext. 105
aday@richmont-mines.com