A takeover of Aurizon Mines (TSX:ARZ,AMEX:AZK) by Alamos Gold (TSX:AGI) looks as good as dead, according to statements this week from the Quebec-focused gold producer.
Earlier this month, Alamos, which operates the Mulatos mine in Mexico, made an unsolicited offer of $4.65 per share for Aurizon, which owns the Casa Berardi and Joanna mines in the Canadian province of Quebec. The C$780-million offer would have boosted Alamos' gold production by 65 percent, to about 300,000 ounces, but Aurizon saw the offer as a lowball.
“This is a financially inadequate and opportunistic offer … It fails to compensate Aurizon shareholders for the true value of our assets,” stated George Brack, chair of a committee formed by Aurizon to examine the deal, in a statement released Wednesday.
Aurizon maintains that the offer represents a 21-percent discount to its 52-week high of $5.75, and is 4.1 percent less than its January 22 closing price; it should therefore be rejected. The stock shot up 33 percent when the offer was first announced on January 14.
Mining and exploration commentator Rick Mills has pointed out that Aurizon signed an option and joint venture (JV) agreement with Niogold Mining (TSXV:NOX) in 2010 that would be attractive to Alamos. The JV gives Aurizon the right to earn a 50-percent interest in Niogold's Marban Block property by spending $20 million on exploration and then making a resource payment for half of the property's estimated gold ounces.
Mills said before this week's announcement that Alamos will “like the Marban Block deal and decide to continue Aurizon's option if they are successful in their bid.” And if they are unsuccessful, which looks the more likely scenario, Mills predicts another offer could be forthcoming: “… the door is open for Niogold's neighbor, Osisko (TSX:OSK), or somebody else, to step in.”