Alamos CEO says likely to drop Aurizon bid if it loses regulatory ruling

Tue Mar 12, 2013 6:31pm EDT
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By Bhaswati Mukhopadhyay and Garima Goel

(Reuters) - Alamos Gold Inc (AGI.TO: Quote) said it was likely to walk away from a bid to buy Aurizon Mines Ltd (ARZ.TO: Quote) AZK.A if it loses a regulatory ruling on the merits of a poison pill adopted by Aurizon and the break fee committed to rival bidder Hecla Mining Co (HL.N: Quote).

"We are not willing to pay a break fee to Hecla that essentially makes the transaction more expensive for us than it does for Hecla," Alamos CEO John McCluskey told Reuters.

Alamos, Aurizon's largest shareholder with a 16.11 percent stake, made a C$780 million hostile offer for the Canadian gold miner in January.

McCluskey said the C$27.2 million break fee pushes Alamos's cost of acquiring Aurizon beyond that of Hecla's.

"Hecla is bidding so little over and above our current bid that the break fee that is in place alone makes it even more expensive. That is quite an absurd situation," McCluskey said, reiterating that Alamos was not considering raising its offer.

At the center of the takeover battle is Aurizon's Casa Berardi gold mine, located in the Abitibi region of mining-friendly northwestern Quebec. The mine has easy access to infrastructure and labor, making it attractive at a time when miners are grappling with rising capital costs.

Hecla made a friendly offer to buy Aurizon at C$796 million, or C$4.75 per share, earlier this month.

Alamos, which last week extended its tender offer deadline to March 19, had offered about C$4.65 per Aurizon share.   Continued...