Gold miners Argonaut and Alio announce merger
Mining News Pro - Canadian companies Argonaut Gold and Alio Gold on Monday announced an at-market merger in which Argonaut would buy Alio to create an intermediate miner producing 235 000 gold-equivalent ounces a year.
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Alio’s shares would be exchanged on the basis of 0.67 of an Argonaut share, with the exchange ratio based on the volume-weighted average prices of the companies’ shares over the 20 trading days ended March 27.

Argonaut CEO Pete Dougherty said that the transaction made sense for both sets of shareholders.

“Combining complementary assets into one larger, more relevant company generates significant synergies.”

Argonaut’s portfolio of gold operations include the El Castillo mine and San Agustin mine, which together form the El Castillo Complex in Durango, Mexico and the La Colorada mine in Sonora, Mexico. Its advanced development stage projects include the Cerro del Gallo project in Guanajuato, Mexico and the Magino project in Ontario, Canada.

Alio owns the Florida Canyon mine, in Nevada, US, and is advancing the Ana Paula project, in Guerrero, Mexico.

The companies said that the merger would capture significant operating and jurisdictional synergies, noting that the Florida Canyon mine was in close proximity to Argonaut’s corporate headquarters.

“This transaction is very positive for Alio Gold shareholders, as it maintains meaningful exposure to the turn-around under way at the Florida Canyon gold mine and the potential of the Ana Paula project, while removing the substantial risk that is inherent in a one-mine company,” said Alio president and CEO Mark Backens.

“The combination with Argonaut benefits our shareholders through participation in a larger, well-funded, and more diverse company that has the ability to invest in high-return projects across the portfolio to unlock a significant value re-rating. Pete and the Argonaut team have a long track record of delivering value from mines very similar to Florida Canyon and we have no doubt that success will continue to benefit all stakeholders.”

Upon completion of the transaction, existing Argonaut and Alio shareholders would own about 76% and 24% of the proforma company.

Argonaut would continue to be managed by the executive team in Reno, Nevada, led by Dougherty as CEO and David Ponczoch as CFO.

Argonaut’s board would continue to be led by chairperson James Kofman and Argonaut has invited two directors from Alio Gold to join the combined board. Paula Rogers and Stephen Lang have been put forward as the Alio members to join Argonaut’s board.


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