ARNGF - Alamos Gold: The King Of Counter-Cyclical M&A

2024-04-15 09:15:14 ET

Summary

• Alamos Gold Inc.'s acquisition of Argonaut Gold brings operational synergies and further expands its land holdings in Ontario, Canada.
• This deal has increased Alamos' long-term production potential to 900,000 to 1.0 million ounces for just ~5% share dilution with impressive growth in NAV, reserves & and production per share.
• In this update, we'll dig into the recent acquisition of AR, the Alamos' continued strategy of sticking to its roots (low-risk, high-reward deals), and how this transforms the company.

It's been a busy year for the sector in terms of M&A with the gold price continuing to trend higher. While there have been some phenomenal deals like Calibre's ( CXBMF ) acquisition of Marathon , Alamos Gold Inc.'s ( AGI ) recent acquisition of Argonaut Gold Inc. ( ARNGF ) arguably takes the cake. This is because the deal truly has operational synergies, which so many deals tout but actually lack, with Alamos now controlling ~60,000 hectares of land along the relatively unexplored Michipicoten Greenstone Belt in Ontario (Canada) and being the only mid-tier producer with the potential to have a Tier-1 jurisdiction and Tier-1 scale gold asset. In this update, we'll dig into the recent acquisition of Argonaut Gold, Alamos' continued strategy of sticking to its roots (low-risk, high-reward deals), and how this transforms the company over the long term.

Another Brilliant Acquisition

Alamos Gold announced last month that it would be acquiring Argonaut Gold for a 41% premium (20-day VWAP), with plans to spin out Florida Canyon and its other Mexican assets. These non-core assets are of little value to Alamos, as they're more marginal mines and/or not producing, with its primary interest being the newly built Magino Mine which is next door to its high-grade Island Gold Mine that it's in the process of expanding. As for Argonaut shareholders praying for a higher bid, I do not see a second suitor as likely given the clear operational synergies with Alamos, the most logical suitor for this asset....

For further details see: