TORONTO, ONTARIO -- (Marketwired) -- 07/12/13 -- Alamos Gold Inc. ("Alamos") (TSX: AGI)(NYSE: AGI) and Esperanza Resources Corp. ("Esperanza") (TSX VENTURE: EPZ)(OTCQX: ESPZF) are pleased to announce that they have entered into a definitive agreement (the "Agreement") pursuant to which Alamos has agreed to acquire all of the issued and outstanding common shares of Esperanza by way of a court-approved plan of arrangement (the "Arrangement").
Esperanza is a precious metals exploration and development company focused on advancing its principal property, the wholly-owned Esperanza gold project (formerly referred to as the Cerro Jumil gold project) in Morelos State, Mexico.
Pursuant to the terms of the Agreement, 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 ("VWAP") for the period ending July 11, 2013. The transaction values Esperanza's equity at approximately C$69.4 million on a fully diluted in-the-money basis. In addition, Esperanza shareholders will be issued approximately five million Alamos warrants in aggregate and existing Esperanza warrant holders will be issued approximately two million Alamos warrants in aggregate. The warrants will be listed for trading on the Toronto Stock Exchange.
"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."
Highlights of the Transaction
-- Esperanza gold project is an attractive, open pit, heap leach project with all in sustaining costs expected to be below $900 per ounce, high margins and potential for further growth;-- Adds measured and indicated resources of 1.5 million ounces of gold and 16 million ounces of silver in Mexico, further growing Alamos's presence in Mexico, a geopolitically stable mining jurisdiction;-- Esperanza shareholders receive a premium of approximately 38% to Esperanza's 30-day VWAP;-- Enhances Alamos's project pipeline by adding an asset with annual average production potential of over 100,000 ounces, with both total cash costs and all-in sustaining costs in the lowest quartile;-- Ability to utilize Alamos's mine permitting and development teams, which include significant open pit, heap leach expertise, to advance the Esperanza gold project to production;-- Ability to fund development and construction of the Esperanza gold project through Alamos's existing cash resources;-- Considerable exploration potential on all assets; and-- Accretive to Alamos NAV, earnings and cash flow with virtually no dilution to Alamos shareholders.