Alamos Gold said that despite Hecla Mining offering a higher bid to its own proposal to acquire Aurizon Mines , it would not raise its consideration, as it believes its bid is superior.
In January Aurizon's management urged its shareholders to reject the C$780 million offer because it was too low and added development and geopolitic risks. Instead, they voted this week to approve a C$796 million offer Hecla made.
Alamos says despite the lower bid, its offer is actually better for Aurizon shareholders because the Hecla proposal creates a "highly leveraged, hedged, debt-laden, financially constrained company."
Since Alamos is Aurizon's largest shareholder, with 16% of the stock, and because other large stakeholders have sided with it, Hecla may find it difficult to reach the required 66.67% approval threshold. Alamos also says Hecla is borrowing heavily to make the deal work; has hedged a large portion of its revenues from gold production; would dilute Aurizon shareholders' gold exposure because 80% of Hecla's revenues are from silver; and Hecla has produced less silver each year since 2009.
Alamos president and CEO John A. McCluskey was quoted as saying, "Our goals over the next few years include achieving production that positions us as one of the 25 largest gold mining companies in the world, while remaining among the 10 lowest-cost mining companies in the world."
Alamos' offer is open for acceptance until 5 p.m. today.
The article Alamos Gold Won't Raise Bid for Aurizon originally appeared on Fool.com.
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