The Exchange Ratio has been agreed based on the volume-weighted average prices of Argonaut and Alio common shares over the 20 trading days ended on
Transaction Highlights
- Creates Diversified Intermediate Producer:
- Diversified platform with production from four operations totaling more than 235,000 gold equivalent ounces1 annually.
- Enhanced asset portfolio and Mineral Reserve and Mineral Resource base.
- Improved geographical diversification with assets in
Mexico, USA andCanada .
- Captures Significant Operating and Jurisdictional Synergies:
- Argonaut has demonstrated operational excellence in open pit, heap leach mining over the last decade.
The Florida Canyon mine is in close proximity to Argonaut's corporate headquarters.- Synergies at corporate and asset level G&A.
- Robust Growth Pipeline:
- Strong internal growth optionality from strengthened asset base.
Mexico : Ana Paula andCerro del Gallo .Canada : Magino.
- Improved Capital Markets Scale:
- Appeals to a broader institutional shareholder base.
- Increases research coverage.
- Improves trading liquidity.
- Financial Flexibility:
- Pro forma
$55 million cash and$25 million debt as atDecember 31, 2019 . $31 million available from Argonaut's existing revolving credit facility.- Improved credit potential from cash flow growth.
_______________________ |
Benefits to Argonaut Shareholders:
- Enhanced Size: Elevates Argonaut within its peer group through an expanded asset portfolio and market presence.
- Improved Life of Mine Profile:
Florida Canyon adds immediate growth and then replacesEl Castillo , which is scheduled to close in 2022. - Diversification: Addition of an operating mine in a market preferred geography (
Nevada, USA ). - Improved Growth Profile: Provides immediate growth with additional long-term development optionality.
- Re-rate Potential: Catalyst for a share price re-rate through expanded production base and enlarged corporate size.
Benefits to Alio Shareholders:
- Improved Financial Profile: Removes liquidity restrictions by way of a strengthened pro forma balance sheet, as well as cash flow generation potential from a diversified asset base.
- Ownership: Meaningful participation in a stronger combined company with a strong technical open pit, heap leach skill set.
- Diversification: Exposure to a multi-mine portfolio in low-risk geographies with a long history of profitable, cash generating production.
- Strong Development Pipeline: Enhanced upside potential from a strong suite of growth assets including the Magino project in
Ontario, Canada and the Cerro del Gallo project inGuanajuato, Mexico in addition to the Ana Paula project inMexico . - Increased Capital Markets Exposure: Increased analyst coverage and share liquidity.
- Re-rate Potential: Catalyst for a share price re-rate through expanded production base and enlarged corporate size.
"This transaction is very positive for
Management and Board
Argonaut will continue to be managed by the executive team in
Argonaut's Board of Directors will continue to be led by Chairman,
Board of Directors' Recommendations
The Arrangement Agreement has been unanimously approved by the Boards of Directors of Argonaut and Alio, and each board recommends that their respective shareholders vote in favour of the Transaction.
The financial advisor to Argonaut, Scotiabank, has provided a fairness opinion to the Board of Directors of Argonaut that, subject to the assumptions, limitations and qualifications set out therein, the Exchange Ratio provided for in the Arrangement Agreement is fair, from a financial point of view to Argonaut.
Transaction Summary
The proposed business combination will be effected by way of a Plan of Arrangement completed under
The Arrangement Agreement includes customary provisions including non-solicitation provisions, a right to match any superior proposal and a
Further information regarding the Transaction will be contained in information circulars that each of Argonaut and Alio will prepare, file and mail to their respective shareholders in late April. All shareholders are urged to read the information circulars once they become available, as they will contain additional important information concerning the Transaction. The Arrangement Agreement will be filed on the SEDAR profiles of Argonaut and Alio on the SEDAR website at www.sedar.com. It is anticipated that both shareholder meetings and the closing of the Transaction will take place in the second quarter of 2020.
Advisors and Counsel
Scotiabank acted as financial advisor to Argonaut.
Conference Call and Webcast
Argonaut and Alio will host a joint conference call and webcast today at
Toll Free (US and
International: 1-647-427-7450
Conference ID: 5088238
Webcast: https://event.on24.com/wcc/r/2250124/0CE9303A1EA09DFABEB18B732FD2A957
Replay Toll Free (US and
Passcode: 5088238
To be available at www.argonautgold.com and www.aliogold.com
About Argonaut
About Alio
Neither the TSX nor its Regulation Services Provider (as that term is defined in the policies of the TSX) nor the NYSE American accepts responsibility for the adequacy or accuracy of this news release.
Cautionary Note Regarding Forward-looking Statements
This press release contains certain "forward-looking statements" and "forward-looking information" under applicable Canadian securities laws concerning the proposed transaction and the business, operations and financial performance and condition of
Factors that could cause actual results to vary materially from results anticipated by such forward-looking statements include risks of the mining industry, the spread of COVID-19 and the impact of government policies to ameliorate COVID-19, failure of plant, equipment or processes to operate as anticipated, changes in market conditions, variations in ore grade or recovery rates, risks relating to international operations, fluctuating metal prices and currency exchange rates, changes in project parameters, the possibility of project cost overruns or unanticipated costs and expenses and labour disputes.
These factors are discussed in greater detail in Argonaut's and Alio's (i) most recent Annual Information Forms, and (ii) most recent Management Discussion and Analysis, which are each filed on Argonaut's and Alio's respective SEDAR profiles and provide additional general assumptions in connection with these statements. Argonaut and Alio caution that the foregoing list of important factors is not exhaustive. Investors and others who base themselves on forward-looking statements should carefully consider the above factors as well as the uncertainties they represent and the risk they entail. Argonaut and Alio believe that the expectations reflected in those forward-looking statements are reasonable, but no assurance can be given that these expectations will prove to be correct and such forward-looking statements included in this presentation should not be unduly relied upon. These statements speak only as of the date of this presentation.
Although Argonaut and Alio have attempted to identify important factors that could cause actual actions, events or results to differ materially from those described in forward-looking statements, there may be other factors that cause actions, events or results not to be anticipated, estimated or intended. There can be no assurance that forward-looking statements will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements.
Neither Argonaut nor Alio undertakes any obligation to update forward-looking statements if circumstances or management's estimates or opinions should change except as required by applicable securities laws. The reader is cautioned not to place undue reliance on forward-looking statements. Statements concerning mineral reserve and resource estimates may also be deemed to constitute forward-looking statements to the extent they involve estimates of the mineralization that will be encountered if the property is developed. Comparative market information is as of a date prior to the date of this document.
SOURCE
© Canada Newswire, source