Canadian junior Esperanza Resources (TSX.V:EPZ) has been acquired by Alamos Gold (TSX:AGI) in a friendly acquisition.
Esperanza shareholders will receive C$0.85 in cash for each common share of Esperanza held, representing a premium of approximately 38% to Esperanza’s 30-day volume-weighted average price. The transaction values Esperanza’s equity at approximately Can$69.4 million on a fully diluted in-the-money basis. In addition, Esperanza shareholders will be issued approximately 5 million Alamos warrants in aggregate and existing Esperanza warrant holders will be issued approximately two million Alamos warrants in aggregate.
Both companies work in Mexico. Alamos runs the Mulatos Mine, as well a some exploration and development properties in Turkey. Esperanza is advancing an open pit gold project in Morels State, Mexico.
Esperanza terminated its agreement with Pan American Silver today. In February Esperanza agreed to acquire three advanced gold projects from Pan American all in Latin American in return for a $35 million investment and a $15 million credit facility.
CEOs from Esperanza and Alamos Gold released statements on the deal.
“Alamos is very pleased to announce this transaction with Esperanza” commented Mr. John A. McCluskey, President and Chief Executive Officer of Alamos. “Esperanza is an excellent strategic fit within our existing portfolio and in our view, is one of the best undeveloped opportunities and significant open pit targets in Mexico. We have followed Esperanza’s progress for some time and see this as a truly compelling opportunity for our shareholders. While the transaction represents less than 5% of our market capitalization, it has the potential to grow our production in Mexico by more than 50%, or nearly 30% on a consolidated basis.”
“This transaction provides an attractive and immediate premium to our shareholders,” said Mr. Greg Smith, President and Chief Executive Officer of Esperanza. “Further, the cash consideration provides liquidity and value certainty while the warrants ensure Esperanza shareholders will retain exposure to the success of the Esperanza gold project going forward. Alamos Gold is an industry leader with substantial experience operating in Mexico and the financial and technical capacity to continue advancing the Esperanza gold project. Finally, I would like to thank our employees for their dedication and hard work over the last number of years and all stakeholders of Esperanza for their support.”