Q: Hi 5i Team - Could you summarize the recent deal between Alamos Gold and Argonaut Gold. I hold shares in Argonaut Gold. Do you think it is worth holding them to gain shares in Alamos as well as shares in the spin-out of Algonquin - or just sell now. When is the anticipated date of the transaction. Thanks
5i Research Answer:
The deal makes sense for AGI, considering the companies have two mines besides each other. Each AR share will be exchanged for 0.0185 shares of AGI, and one share of a spin out company, holding AR's non-Canadian assets. The spin out company is estimated to be worth 6c per share, and the premium on the deal was pegged at 38%. No closing date was set, and an offering circular has to be completed and mailed to shareholders, and a shareholder vote set. We would expect at least three months to close. We think AGI is one of the better sector names and we would be comfortable exchanging AR shares for AGI in the tender offer.