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Alamos makes $780-million takeover offer for Aurizon

2013-01-14 08:03 ET - News Release

See News Release (C-AGI) Alamos Gold Inc

Mr. John McCluskey of Alamos reports


Alamos Gold Inc. has commenced an offer to acquire Aurizon Mines Ltd. for approximately $780-million in cash and shares. The offer will remain open until 5 p.m. (Toronto time) on Feb. 19, 2013, unless withdrawn or extended. Alamos has also applied to list its common shares on the New York Stock Exchange under the symbol AGI.

Under the terms of the offer, Alamos proposes to acquire all of the outstanding common shares of Aurizon for consideration value of $4.65 per Aurizon share. Each Aurizon shareholder can elect to receive consideration per Aurizon share of either $4.65 in cash or 0.2801 of an Alamos share, subject in each case to proration based on a maximum cash consideration of $305-million and maximum number of Alamos shares issued of 23.5 million.

The offer reflects a premium of approximately 40 per cent based on the closing price of $3.33 for the Aurizon shares on the Toronto Stock Exchange on Jan. 9, 2013, and a premium of approximately 37 per cent based on the volume-weighted average price of the Aurizon shares on the TSX for the 20 trading days ended Jan. 9, 2013.

Full details of the offer are included in the formal offer and takeover bid circular that will be filed today with securities regulatory authorities (together with all related documents). Alamos will formally request an Aurizon security holder list today. The takeover bid documents will be mailed to Aurizon shareholders.

As of today, Alamos owns 26,507,283 Aurizon shares, representing over 16 per cent of the issued and outstanding Aurizon shares.

Alamos president and chief executive officer John McCluskey said: "We believe that our offer presents an attractive alternative for Aurizon shareholders. In addition to the Aurizon shares we recently acquired, shortly before announcing our offer, we approached a select few major institutional holders of Aurizon shares. Each of these holders was supportive of us making the offer. This response adds to our confidence that our offer is attractive to Aurizon shareholders. We believe the combined companies will form one of the strongest and lowest risk production and growth profiles in the gold sector today. The offer, combining the world-class assets of the two companies, demonstrates Alamos's ability to identify and pursue opportunities that present a strong strategic fit with our goal to become a leading intermediate gold producer."

Highlights of the transaction

Alamos believes that the offer is attractive to Aurizon shareholders for the following reasons:

Significant premium


  • Based on the closing price of $16.60 per Alamos share on the TSX on Jan. 9, 2013, the consideration offered under the offer has a value of $4.65 per Aurizon share, representing a premium of approximately 40 per cent and 39 per cent, respectively, over the closing price of $3.33 and $3.39 per Aurizon share on the TSX and NYSE on Jan. 9, 2013. Based on the volume-weighted average price of Alamos shares on the TSX for the 20 trading days ended Jan. 9, 2013, the offer represents a premium of approximately 37 per cent over the volume-weighted average price of the Aurizon shares on the TSX and NYSE for the same period.


Creation of a leading intermediate gold company


  • The combination of Alamos and Aurizon will immediately create a new leading intermediate gold mining company with increased diversification, scale and liquidity. The combined entity is anticipated to have an estimated market capitalization of approximately $2.6-billion, with enhanced visibility among the international investor community as well as continued exposure to the North American capital markets through listings on both the TSX and the NYSE. The combined company, with two steady producing, low-cost mines located in stable jurisdictions, will be strongly positioned for growth.


Established, well-financed, shareholder-focused team in place


  • Alamos offers Aurizon shareholders the benefits of both the project development and operation expertise of the Alamos management team as well as access to pro forma combined estimated cash and cash equivalents and short-term investments of approximately $209.7-million with which to advance projects without any near-term dilution. Alamos will continue to be guided by a board of directors and management team with extensive project development, acquisition, operation and other relevant industry experience necessary to advance projects from the exploration stage through production and to create shareholder value by doing so.


Financial capability to secure future of Aurizon's assets


  • Alamos's balance sheet and operating cash flow will be available to support the strong growth profile of the combined company without an expectation of a need for any equity capital raisings. Alamos will remain unhedged and debt free. Alamos is also well placed to take advantage of the exploration potential of the combined entity to unlock the upside potential for all shareholders. The offer provides a much needed growth profile for Aurizon shareholders. Alamos expects to continue its strong dividend policy.


Exposure to other attractive mineral projects


  • Aurizon shareholders who tender to the offer will gain exposure to the world-class projects of Alamos, including the producing Mulatos mine in Mexico, one of the world's most profitable gold mines. Alamos also owns a 100-per-cent interest in the advanced-stage gold projects -- the Agi Dagi and Kirazli projects -- in Turkey and has other earlier-stage exploration properties in both Mexico and Turkey. The significant production profile of the combined companies will allow Aurizon shareholders who receive Alamos shares to increase their exposure to the strong gold price environment over the short term to midterm.


Management record in developing and managing world-class gold projects


  • Alamos has a management team with a solid record and proven experience in the gold industry. The Alamos management team has demonstrated its ability, via the Mulatos mine in Mexico, to identify, explore, finance, construct, commission and operate a world-class gold mine. It is also applying this experience to the development of the Agi Dagi and Kirazli projects in Turkey, which remain on track and on budget.


Opportunity for continued participation in Aurizon's assets


  • To the extent that Aurizon shareholders receive Alamos shares as part of their consideration under the offer, they will benefit from any future increases in value associated with the continued exploration and development of Aurizon's portfolio of assets, as well as production at Aurizon's flagship Casa Berardi gold mine.


Opportunity to elect consideration


  • The offer provides Aurizon shareholders with the opportunity to determine the consideration that they receive under the offer, either the cash alternative or the share alternative, subject in each case to proration. The cash alternative permits Aurizon shareholders to elect to receive up to 100 per cent in cash consideration (subject to proration) in exchange for their Aurizon shares to lock in the premium offered under the terms of the offer, while the share alternative permits Aurizon shareholders to elect to receive up to 100 per cent in Alamos shares (subject to proration) in exchange for their Aurizon shares and thereby maintain maximum exposure to the significant upside potential of the combined Alamos and Aurizon company going forward.


Opportunity to defer Canadian taxation on capital gains


  • To the extent that Aurizon shareholders receive Alamos shares as consideration under the offer, certain Aurizon shareholders will be entitled, depending on the circumstances, to a full or partial deferral of Canadian taxation on capital gains.


Financing and conditions

The offer will be fully financed and will not require approval by Alamos shareholders. The offer will be open for acceptance for at least 35 days following the mailing of the takeover bid circular and will be subject to customary conditions, including there being validly deposited under the offer such number of Aurizon shares which, together with Aurizon shares directly or indirectly owned by Alamos and its affiliates, constitutes at least 66-2/3rds per cent of the total outstanding Aurizon shares (calculated on a fully diluted basis), Aurizon shall not have adopted a shareholder rights plan, subject to certain limited exceptions, no material adverse changes, and receipt of all necessary governmental or regulatory approvals and other customary unsolicited offer conditions.

Important notice

This press release does not constitute an offer to buy or the solicitation of an offer to sell any of the securities of Alamos or Aurizon.

Alamos encourages shareholders of Aurizon to read the full details of the offer set forth in the formal offer and takeover bid circular, which contains the full terms and conditions of the offer and other important information as well as detailed instructions on how Aurizon shareholders can tender their Aurizon shares to the offer. For assistance in depositing Aurizon shares to the offer, Aurizon shareholders should contact Kingsdale Shareholder Services Inc., the depositary and information agent for the offer, at 1-866-851-3214 (North American toll-free number) or 416-867-2272 (outside North America).

On Jan. 14, 2013, Alamos will file with the United States Securities and Exchange Commission a registration statement on Form F-10 and a tender offer statement on Schedule TO in connection with the offer, which are available free of charge through the SEC's website.

The offer and takeover bid circular and these other documents also may be obtained free of charge by directing a request to the investor relations department of Alamos.

Advisers and counsel

Alamos has retained Dundee Capital Markets to act as its financial adviser in connection with the offer. Alamos's legal counsel is Torys LLP.

Conference call details

Alamos will host a conference call on Jan. 14, 2013, at 10 a.m. Eastern Time. Participants may join the call by dialling 416-340-2216 or 1-866-226-1792, or via webcast. A playback will be available until March 8, 2013, at 905-694-9451 or 1-800-408-3053. The pass code for the conference call playback is 4914307. The webcast will be archived at the company's website.

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