AGI - Alamos Gold Eliminates Majority of Argonaut Gold Hedge Book Providing Increased Exposure to Higher Gold Prices | Benzinga
All amounts are in United States dollars, unless otherwise stated.
TORONTO, July 15, 2024 (GLOBE NEWSWIRE) -- Alamos Gold Inc. (TSX:AGI, NYSE:AGI) ("Alamos" or the "Company") today announced that it has entered into a gold sale prepayment agreement ("gold prepayment") for total consideration of $116 million in exchange for the delivery of 49,384 ounces in 2025. The proceeds of the gold prepayment were used to eliminate gold forward purchase contracts, previously entered into by Argonaut Gold ("Argonaut"), totalling 179,417 ounces in 2024 and 2025 with an average price of $1,838 per ounce. The transaction has eliminated more than half of the Argonaut hedge book and associated mark-to-market liability, while providing significantly increased exposure to rising gold prices.
As part of the recently closed acquisition of Argonaut, Alamos inherited Argonaut's hedge book which included gold forward purchase contracts totaling 329,417 ounces between 2024 and 2027. The average forward prices on the contracts ranged between $1,821 and $1,860 per ounce (Table 1). The transaction has closed out all of the 2024 and 2025 forward purchase contracts.
To fund the closing out of the hedges, Alamos entered into a gold prepayment agreement on attractive terms given the strong forward gold price environment. Under the terms of the gold prepayment, Alamos received total consideration of $116 million in exchange for the delivery of 49,384 ounces in 2025, settled monthly, based on average forward curve prices of $2,524 per ounce. The gold prepayment was executed by Canadian Imperial Bank of Commerce (lead), Bank of Montreal, National Bank of Canada, and ING Capital Markets LLC.
The remaining Argonaut hedge book, inherited by Alamos on the close of the acquisition, consists of forward purchase contracts totaling 150,000 ounces in 2026 and 2027. This is expected to account for less than 12% of total consolidated production over that time frame. The Company will continue to review opportunities to unwind the remaining 2026 and 2027 forward purchase contracts.
"This transaction has significantly enhanced our exposure to rising gold prices on attractive terms, most notably in the near term. We expect our growing production and declining costs to drive significant free cash flow growth in the years ahead. With the majority of the Argonaut hedge book now eliminated, we are even better positioned to capitalize on the favourable outlook for gold," said John A. McCluskey, President and Chief Executive Officer.
About Alamos
Alamos is a Canadian-based intermediate gold producer with diversified production from three operations in North America. This includes the Young-Davidson mine and Island Gold District in northern Ontario, Canada and the Mulatos District in Sonora State, Mexico. Additionally, the Company has a strong portfolio of growth projects, including the Phase 3+ Expansion at Island Gold, and the Lynn Lake project in Manitoba, Canada. Alamos employs more than 2,400 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".
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Certain of the statements made and information contained herein, other than statements of historical fact and historical information, is "forward-looking information" within the meaning of applicable Canadian and U.S. securities laws. Forward-looking statements are generally, but not always, identified by the use of forward-looking terminology such as "expect", "will", "may", "potential" or variations of such words that certain actions, ...