Argonaut Gold Inc. (TSX:AR) entered into a letter of intent to acquire Alio Gold Inc. (TSX:ALO) for CAD 62.8 million on February 26, 2020. Argonaut Gold Inc. (TSX:AR) entered into a definitive agreement to acquire Alio Gold Inc. (TSX:ALO) March 30, 2020. Under the terms of the Arrangement Agreement, all of the Alio issued and outstanding common shares will be exchanged on the basis of 0.67 of an Argonaut common share per each Alio common share. Also, Alio RSUs, Alio PSUs and Alio DSUs will be exchanged for 0.67 Argonaut shares. Upon completion of the Transaction, existing Argonaut and Alio shareholders will own approximately 76% and 24% of the pro forma company, respectively, on a fully-diluted, in-the-money basis. A $2 million (CAD 2.82788 million) termination fee payable to Argonaut under certain circumstances. Argonaut will continue to be managed by the executive team in Reno, Nevada led by Peter Dougherty as Chief Executive Officer and David Ponczoch as Chief Financial Officer. Argonaut's Board of Directors will continue to be led by Chairman, 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 Gold members to join Argonaut's Board. Committees are expected to be reconstituted at the first board of directors' meeting following the close of the transaction.

The transaction will require approval by 66 2/3 percent of the votes cast by the shareholders of Alio at a special meeting of Alio shareholders. The issuance of Argonaut common shares in connection with the transaction will require the approval of a simple majority of the shareholders of Argonaut voting at a special meeting. The transaction is subject to the receipt of certain regulatory, court and stock exchange approvals, Alio receiving the Argonaut Lock-Up Agreements, Argonaut receiving the Alio Lock-Up Agreements, approval from Comisión Federal de Competencia Económica – COFECE, approval of listing of consideration shares, Alio shareholders holding no more than 5% of the issued and outstanding Alio Shares, shall have exercised dissent rights and the satisfaction of certain other closing conditions customary in transactions of this nature. The transaction is also subject to the closing of Alio's previously announced sale of the San Francisco mine to Magna Gold Corp. The transaction has been unanimously approved by the Boards of Directors of Argonaut and Alio, and each board recommends that their respective shareholders vote in favor of the transaction. Alio and Argonaut will hold their respective meetings of shareholders on May 20, 2020 to approve the transaction. Glass, Lewis & Co. and Institutional Shareholder Services Inc. both recommend that Argonaut and Alio shareholders vote in favor of the resolutions to be voted on at the special meetings of shareholders to be held on May 20, 2020. On May 20, 2020, shareholders of Alio and Argonaut approved the transaction. On May 22, 2020, the court approved the transaction. As of June 22, 2020, the Comisión Federal de Competencia Económica (“COFECE”) cleared the transaction. It is anticipated that the closing of the transaction will take place in the second quarter of 2020. As of May 12, 2020, the transaction is expected to close in June 2020. As of June 22, 2020, the transaction is expected to be completed between June 29, 2020 and July 3, 2020.

Scotiabank acted as financial advisor to Argonaut and provided a fairness opinion to the Board of Directors of Argonaut. Sander A.J.R. Grieve and David Gruber of Bennett Jones LLP acted as Argonaut's legal advisor. RBC Dominion Securities Inc. has provided a fairness opinion to the Board of Directors of Alio. Alexandra Luchenko, Sean K. Boyle and Andrew J. McLeod of Blake, Cassels & Graydon LLP acted as Alio's legal advisor. Computershare Trust Company of Canada acted as transfer agent of Alio. Gryphon Advisors Inc. acted as information agent to Argonaut for fee of $0.05 million (CAD 70,610) and Laurel Hill Advisory Group, LLC acted as information agent to Alio for fee of $0.05 million (CAD 70,610). RBC Capital Markets acted as fairness opinion provider to Alio.

Argonaut Gold Inc. (TSX:AR) completed the acquisition of Alio Gold Inc. (TSX:ALO) on July 1, 2020. Argonaut common shares will continue trading on the Toronto Stock Exchange with no changes. Alio shares are expected to cease trading on the NYSE American on July 1, 2020 and be de-listed from the Toronto Stock Exchange after close of business on July 3, 2020.