Alamos Gold Inc. (
TSX:AGI;
NYSE:AGI) (“Alamos” or the “Company”) announced today that
it has entered into a binding agreement to sell its non-core
Esperanza Gold Project (“Esperanza”) located in Morelos State,
Mexico to Zacatecas Silver Corp. (“Zacatecas Silver”) for total
consideration of up to $60 million (the “Transaction”). The
Transaction is comprised of the following:
(i) $21 million of total consideration upon closing of the
Transaction, including:
- $5 million in
cash;
- $10 million of
Zacatecas Silver shares (12.14 million common shares at a price of
C$1.05) (“Initial Shares”); and
- A silver metal
stream valued at approximately $6 million based on consensus
long-term silver price estimates. Under the stream, Alamos is
entitled to receive 20% of the silver produced from Esperanza at a
cash price of 20% of the prevailing spot silver price, subject to a
maximum of 500,000 ounces of silver delivered to Alamos.
(ii) $39 million of additional consideration upon the completion
of the following milestones (“Contingent Payments”):
- $5 million within 60
days following Zacatecas Silver receiving approval of the
Environmental Impact Assessment Report for Esperanza;
- $14 million within
60 days of the earlier of (i) completion of a feasibility study on
Esperanza, or (ii) Zacatecas Silver announcing a construction
decision on Esperanza; and
- $20 million within
180 days of commencement of commercial production from
Esperanza.
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.
Advisors
Haywood Securities Inc. is acting as financial advisor to
Alamos, with Torys LLP acting as legal advisor to Alamos.
About 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. The
Company’s shares are traded on the TSX and NYSE under the symbol
“AGI”.
FOR FURTHER INFORMATION, PLEASE CONTACT:
Scott K. Parsons |
|
Vice President, Investor Relations |
|
(416) 368-9932 x 5439 |
|
All amounts are in United States dollars, unless otherwise
stated.
The TSX and NYSE have not reviewed and do not accept
responsibility for the adequacy or accuracy of this release.
Cautionary Note
This news release contains or incorporates by
reference “forward-looking statements” and “forward-looking
information” as defined under applicable Canadian and U.S.
securities laws which are referred to herein as “forward
looking-looking statements”. All statements, other than statements
of historical fact, which address events, results, outcomes or
developments that the Company expects to occur are, or may be
deemed to be, forward-looking statements and are generally, but not
always, identified by the use of forward-looking terminology such
as "expect", “is expected”, “outlook”, “on track”, “continue”,
“ongoing”, "will", “believe”, “anticipate”, "intend",
"estimate", "forecast", "budget", “target”, “plan” or variations of
such words and phrases and similar expressions or statements that
certain actions, events or results “may", “could”, “would”, "might"
or "will" be taken, occur or be achieved or the negative
connotation of such terms.
Forward-looking statements are necessarily based
upon a number of factors and assumptions that, while considered
reasonable by management at the time of making such statements, are
inherently subject to significant business, economic, technical,
legal, political, and competitive uncertainties and contingencies.
Known and unknown factors could cause actual results to differ
materially from those projected in the forward-looking statements,
and undue reliance should not be placed on such statements and
information.
Forward-looking statements include assumptions
as to future corporate actions taken by Zacatecas Silver, over
which the Company has no or little control, and includes Zacatecas
making all required expenditures pursuant to their agreement with
the Company; Zacatecas’ completion of all required steps to receive
approval of the Environmental Impact Assessment for Esperanza;
Zacatecas’ ability to complete a positive feasibility study and/or
announcing a construction decision with respect to Esperanza and
ultimately the ability of Zacatecas to construct and achieve
commercial production with respect to Esperanza.
Such factors and assumptions underlying the
forward-looking statements in this news release, but are not
limited to: changes to current estimates of Mineral Reserves and
Resources with respect to Esperanza; permitting of Esperanza;
changes to production estimates; state and federal orders or
mandates (including with respect to mining operations generally or
auxiliary businesses or services required for the Zacatecas’
operations in Mexico, fluctuations in the price of gold or certain
other commodities; changes in foreign exchange rates; the impact of
inflation; employee and community relations (including the ability
of Zacatecas Silver maintaining social license to operate in
Morelos State, Mexico); labour and contractor availability (and
being able to secure the same on favourable terms); litigation and
administrative proceedings; disruptions affecting operations
availability of and increased costs associated with future mining
inputs and labour; development delays at Esperanza; inherent risks
and hazards associated with mining and mineral uncertainty with
respect to the ability of Zacatecas Silver to secure additional
capital to execute its business plans; the speculative nature of
mineral exploration and development, risks in obtaining and
maintaining necessary licenses, permits and authorizations,
contests over title to properties; expropriation or nationalization
of property; political or economic developments in Mexico;
increased costs and risks related to the potential impact of
climate change; changes in national and local government
legislation, controls or regulations (including tax legislation)
in Mexico.
The Company disclaims any intention or obligation to update or
revise any forward-looking statements whether as a result of new
information, future events or otherwise, except as required by
applicable law.
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