A Deal AuRico Had To Do: The Alamos Gold-AuRico Gold Merger
Alamos Gold Inc. (TSX: AGI) and AuRico Gold Inc. (TSX: AUQ) reported on April 13, 2015, that the two companies will merge in a transaction valued at approximately US$1.5 billion. Alamos shareholders will receive one share of the newly merged company for each Alamos share held, while AuRico shareholders will receive 0.5046 of a share for each AuRico share held.
In addition a new company, to be named AuRico Metals Inc., will be created to hold AuRico's Kemess project, a 1.5% net smelter return royalty on the Young-Davidson mine, AuRico's Fosterville and Stawell royalties, and will be capitalized with US$20 million of cash. About 94.9% of the new spinoff company will be distributed equally to former shareholders of both Alamos Gold and AuRico Gold. Alamos Gold shares moved up 7% to $7.90 following the announcement, while AuRico Gold shares also gained 8% to $4.09.
While Alamos Gold didn't need this transaction, it was a far different story for AuRico. Based on the company's 2014 year-end results, AuRico Gold was producing gold at all-in sustaining costs of US$1,200 per ounce, up 2% from the previous year. Its operating cash flow for the year, meanwhile, declined 5% to $60.4 million.
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